When investors think of a safe dividend stock, it’s safe to say Bombardier, Inc. (TSX:BBD.B) isn’t the first name that comes to mind. In fact, it’s probably close to the bottom of such a list.

The reasons are plenty. The company’s CSeries project has been barely short of a disaster. The program has been riddled with cost overruns, delays, and it even had a engine fail during a test flight. It finally started delivering jets to its first customers just a few weeks ago, a full three years after deliveries were originally planned to begin.

The company is also in somewhat dire financial straits. As of March 31, it had US$3.8 billion in the bank, an impressive number on its own. But when that cash is offset by nearly US$9.5 billion in debt (including preferred shares), things suddenly look a whole lot more dire.

Bombardier is also burning cash. In the last year, cash on hand decreased from US$5.3 billion to US$3.8 billion. Most analysts agree the company will continue to burn cash for at least a little while longer until CSeries production really ramps up.

This cash burn prompted the company to eliminate the dividend on its common shares over a year ago in an effort to save a little more money.

With common-share dividends at zero, how exactly can investors get income from Bombardier? And with the company in such dire straits, how can investors count on dividends from the company over the long haul?

The skinny

Bombardier has a number of preferred shares–a hybrid security that acts a little bit like common stock and a little bit like debt.

For companies with good debt ratings, preferred shares mostly act like debt. They pay fixed dividends, just like bonds have fixed interest payments. These shares will go up if the market thinks interest rates are heading down and do the opposite if folks think rates are about to go higher.

For a company like Bombardier with obvious credit issues, the preferred shares act a little differently. The big threat with Bombardier isn’t interest rates. It’s the health of the company. Thus, these shares trade on the market’s perception of Bombardier’s ability to pay dividends.

Surprisingly, Bombardier’s future isn’t really as bad as we first might think.

A potential home run

A number of things have gone Bombardier’s way lately.

The company won two big CSeries orders from Air Canada and Delta Air Lines. It also negotiated a fresh US$2.5 billion cash infusion from various parts of the Quebec government in exchange for ownership stakes in both the CSeries and the more stable Transportation division. And although both sides are far apart today, there is certainly willingness for a similar cash infusion from the federal government.

There is a great political desire in Canada to save Bombardier. The company is an important employer in a part of the country that most politicians want to court. Additionally, a cutting-edge company like Bombardier is a source of pride for all of Canada. There’s a certain patriotic appeal to stepping on Canadian-built planes and trains.

It’s for these reasons why the preferred shares look attractive. If governments won’t let the company go bankrupt, then getting +9% yields looks like a very good opportunity in today’s market.

The series 4 preferred shares (which trade under the ticker TSX:BBD.PR.C) currently yield 9.4%. These are perpetual preferred shares, which means they’ll continue to pay the same quarterly dividend of $0.39 per share as long as they’re outstanding.

There’s little chance of this dividend going away unless bankruptcy is right around the corner. The company knows if it suspends preferred share dividends, the market will react very badly. Thus, such a move is a last resort.

Besides, the payout for these preferred shares isn’t much in the scheme of things. It works out to less than $15 million per year–a drop in the bucket for a company like Bombardier.

If you believe Bombardier will get through this rough patch without having to declare bankruptcy, the preferred shares offer great yields. It’s that simple.

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Fool contributor Nelson Smith has no position in any stocks mentioned.