Dividend dynamo CenturyLink (NYSE: CTL) didn't live up to every expectation in the fourth quarter. That's OK. Sometimes, "good enough" will do just fine.

By the numbers
The nation's third-largest hardwired phone company posted $0.55 of adjusted earnings per share, well short of Wall Street's $0.61 consensus target. Its $4.65 billion in operating revenue was generally in line with analyst estimates.

Share prices rose 1.5% the next day, seemingly a sign of satisfied investors. But zoom out a bit and the happy veneer fades a little: Even including the $0.73 per-share dividend payment in December, CenturyLink has trailed the market by a few percentage points since the third-quarter report.

OK, so what's a couple of percentage points between friends? CenturyLink is hardly the kind of stock that attracts day traders. It's just the perfect shape to fit into a long-term buy-and-hold portfolio with dividends firmly reinvested. Sensible investors here focus more on the long-term prospects of the business and the beefy 7.5% annualized payouts that follow, less on earnings weakness in a single quarter.

Long-term prospects
From that angle, this was not a bad report. CenturyLink is losing traditional phone customers, just like everyone else around the industry. But the line losses slowed down in this quarter and CenturyLink makes up for some of it by adding high-speed Internet accounts and TV service subscribers.

The Prism TV product is particularly promising, growing by 30% this quarter. That's 30% above the third quarter, not a year-over-year comparison. Prism is not a copper-line platform like AT&T (NYSE: T) U-Verse but a fiber-optic service like Verizon (NYSE: VZ) FiOS. So CenturyLink can't simply install a compatible cable box, hook it up to the DSL pipe, and tell you to start enjoying your next-generation TV -- you need an expensive fiber pull to your neighborhood. It's a more expensive solution, but one that Verizon and CenturyLink expect to keep their customers happier and more loyal.

The service is currently available to only 1 million homes in CenturyLink's service areas, though the company expects to double that number in 2012. And only 7% of those potential customers have signed up for Prism service so far. There's plenty of untapped growth here.

Some of that Prism opportunity rests on the recently acquired Qwest business. Qwest was already busy rolling out fiber connections and none of the acquired markets have seen any Prism rollouts so far.

The integrations of Qwest and data center operator SAVVIS continue apace. According to CEO Glen Post, CenturyLink "made solid progress" on both fronts, which is somewhat short of "spectacular" but better than "disappointing."

Who cares? I'm here for the dividends!
Oh, and those terrific dividend payouts are safe. CenturyLink produced $515 million of free cash flow in the fourth quarter, more than enough to cover the $451 million paid out in dividends. Management is committed to paying dividends first and using cash for other things second. In 2012, most of the cash flows not funneled into shareholder pockets will go toward paying off debt.

Telecom stocks are a dividend investor's dream come true. The industry is very mature, leaving companies free to spend money on generous payouts rather than chasing growth. You can even get a combination of growth and income by investing in companies with large wireless interests; my personal portfolio includes France Telecom (NYSE: FTE) because the stock marries a 9.3% dividend yield to the Orange brand of global wireless services. Even relatively unknown telecoms can power some impressive payouts, like regional Lilliput Alaska Communications Systems (Nasdaq: ALSK) and its 6.9% yield. Then again, Alaska's dividends aren't as rock-solid as CenturyLink's.

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