Dividend stocks are everywhere, but many just downright stink. In some cases, the business model is in serious jeopardy, or the dividend itself isn't sustainable. In others, the dividend is so low it's not even worth the paper your check is printed on. A solid dividend strikes the right balance of growth, value, and sustainability.

Today, we're going to look at one dividend-paying company that you can put in your portfolio for the long term without too much concern. This isn't to say that this stock doesn't share the same macro risks that other companies have, but it's a step above your common grade of dividend stock. Check out the previous selection.

This week, we'll turn our attention to specialty gases and hard goods supplier Airgas (NYSE: ARG) and I'll show you how being filled with hot air can actually be a great thing for this company and income-seeking investors.

Source: Mike Mozart, Flickr.

Before you float away...
As we do every time we examine a potentially picture-perfect income stock we'll first examine what challenges lie ahead that could deflate Airgas and its exceptional dividend growth.

Perhaps nothing stands out as more of a challenge to Airgas than its reliance to the health of the U.S. economy. Airgas' business segments, including its specialty gases and hard goods supplied to the non-residential construction and industrials sector, are going to have an almost impossible time of growing if the U.S. economy isn't expanding.

Source: Dwight Burdette, Wikimedia Commons.

During the fourth quarter Airgas reported a 1% decline in organic sales with gas and rent revenue and hard goods revenue off by 1% and 2%, respectively. Part of this was attributable to the polar vortex, which pushed the U.S. economy into a 2.9% contraction for Q1, but the remainder was due to ongoing sluggish non-residential construction growth. Even though Airgas operates in many regions of the world, its products are still intricately tied to the U.S. economy and therefore its results can tend to move in tandem with U.S. GDP.

Also, there's the operational risk of implementing the company's SAP Enterprise Resource Planning system which will cater to its e-commerce and tele-business opportunities as well as streamline its operations by connecting them all to a single platform. We're seeing more and more companies turning to cloud-based human resource and cycle management software in an effort to improve long-term growth prospects and reduce costs. While this is projected to be a positive for Airgas, there are numerous "kinks" still to be worked out during its implementation.

In Q4, for example, even with the company reaching its goal of more than $75 million in SAP-enabled operating income benefits, it wound up seeing these benefits far outweighed by higher health care costs and rising operating expenses tied to the polar vortex. I'm not sure investors understand how difficult it is to seamlessly implement a platform like this, and integration issues could arise over the coming quarters.

Source: Paul Sableman, Flickr.

The Airgas advantage
Every company has potential shortcomings, but Airgas also offers investors the opportunity for hefty long-term gains.

The factor most working in favor of investors is Airgas' business diversity. As Foolish contributor Bob Ciura noted last year Airgas has in excess of 1 million customers and not a single one accounts for more than half of one percent of Airgas' business. This means that losing a particular customer isn't necessarily detrimental to Airgas and that its business is hedged against economic downside. A perfect case in point would be ongoing weakness in non-residential construction, which is being offset by strength in the railcar construction business.

Secondly, while the integration of its SAP platform could provide some near-term uncertainties, the long-term cost savings and operational improvement from making this global switch should only enhance Airgas' margins and could lead to additional dividend increases for shareholders. Airgas' SAP-ERP will focus on improving consumer convenience and interface interactions which should save time and keep customers loyal to the brand. In instances that do require a personal touch, simply having its new interface in place should free up its sales staff to deal with customers, ultimately improving the quality of its customer service.

Another point to consider is that Airgas operates in a niche business where it controls about 25% of the specialty gases and welding-equipment market share. Since there are so few large-scale specialty gas choices for enterprises to choose from, Airgas maintains impressive pricing power. In expansionary economies, this gives Airgas the opportunity to pass along price increases to its customers in order to beef up its profits and expand its business.

Show me the money!
But, the real reason we're here today is take a closer look at what really makes Airgas special: its incredible dividend growth.

Airgas is currently riding an 11-year streak of dividend increases, which in itself is already impressive considering that it's a cyclical company that survived the worst recession the U.S. has seen in seven decades. Since it began paying a dividend in June 2003 Airgas' payout has skyrocketed by a compounded annual rate of 26.9% to $0.55 in its latest quarter compared to just $0.04 per quarter 11 years ago.

Graph by author. Data source: Nasdaq.com. Implies $0.55/quarter payout for remainder of 2014.

Although Airgas' current yield equates out to just 2%, income-seeking investors shouldn't be disappointed since its share price appreciation is the primary reason its yield hasn't soared. Any shareholder receiving a nearly 19% compounded annual return on Airgas' share price since July 2003 and a 27% boost in its dividend per year since 2003 isn't likely to complain that the current yield is "just 2%."

Furthermore, even with its recent double-digit dividend boost Airgas' payout ratio is a mere 43% of its forecasted 2015 EPS. This relatively minuscule payout ratio gives Airgas the liberty of boosting its dividend going forward, but also gives it the ability to pay down its $2.5 billion in net debt.