Dividend investing is a tried-and-true strategy for generating strong, steady returns in both good and bad economies. But, as corporate America's slew of dividend cuts and suspensions over the past few years has demonstrated, it's simply not enough to buy a high yield. You also need to make sure those payouts are sustainable.

Let's examine how National Presto Industries (NYSE: NPK) stacks up in four critical areas to determine whether it's a dividend dynamo or a disaster in the making.

1. Yield
First and foremost, dividend investors like a large yield. But if a yield gets too high, it may reflect investors' doubts about the payout's sustainability. If investors had confidence in the stock, they'd be buying it, driving up the share price and shrinking the yield.

National Presto yields a massive 8.4%, if you include its regular and special dividends -- certainly worth further investigation.

2. Payout ratio
The payout ratio might be the most important metric for judging dividend sustainability. It compares the amount of money a company pays out in dividends to the amount it generates. A ratio that's too high -- say, greater than 80% of earnings -- indicates that the company may be stretching to make payouts it can't afford.

National Presto’s payout ratio is a conservative 11%.

3. Balance sheet
The best dividend payers have the financial fortitude to fund growth and respond to whatever the economy and competitors throw at them. The interest coverage ratio indicates whether a company is having trouble meeting its interest payments -- any ratio less than five is a warning sign. Meanwhile, the debt-to-equity ratio is a good measure of a company's total debt burden.

National Presto doesn’t carry any debt.

4. Growth
A large dividend is nice; a large growing dividend is even better. To support a growing dividend, we also want to see earnings growth.

Let's examine how National Presto stacks up next to its peers:

Company

5-Year Earnings-Per-Share Growth

5-Year Dividend Growth

National Presto Industries

29%

31%

Esterline Technologies (NYSE: ESL)

21%

N/A

Teledyne Technologies (NYSE: TDY)

13%

N/A

Curtiss-Wright (NYSE: CW)

8%

9%

Source: Capital IQ, a division of Standard & Poor's.

Over the past five years, National Presto’s earnings have grown dramatically. Its dividend has followed suit.

The Foolish bottom line
National Presto exhibits a fairly clean dividend bill of health. Despite its whopping yield, the payout ratio is quite modest, assuming the company is able to maintain its contracts.

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Ilan Moscovitz doesn’t own shares of any companies mentioned. You can follow him on Twitter @TMFDada. The Motley Fool owns shares of National Presto Industries. Motley Fool newsletter services have recommended National Presto Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.