The market mood is as changeable as ever. That’s likely to keep stock prices volatile, particularly as the approach of Dec. 31 narrows the opportunity for money managers to excel this year.

Canadian Edge readers face no such artificial deadline. So long as our dividend-paying stocks’ underlying businesses remain healthy and growing, they’ll recover whatever damage they suffer to near-term chop. And we’ll continue to collect a superior stream of dividends, many of which are growing once again.

Analyzing business strength is my primary goal as CE Portfolio companies release their third-quarter earnings. My second objective is to point out companies where investors are over-pricing risk to dividends.

Investors’ perception of risks continues to change almost daily. That’s in part because of the disasters that have befallen companies such as Yellow Media Inc (TSX: YLO, OTC: YLWPF), which have raised the fear level for any dividend-paying stock with perceived weaknesses. As a result many companies with well-covered and in fact growing dividends are still priced at big discounts to stocks perceived safer, just as though dividend cuts were imminent.

We’ve already seen some strong rallies this earnings season from high-yielding Canadian Edge companies that beat estimates handily. EnerCare Inc’s (TSX: ECI, OTC: CSUWF) robust results and the accompanying 2 percent dividend increase announced Monday have already added nearly 15 percent to its share price. I highlighted the company’s numbers in a Nov. 8 Flash Alert.

Results from the four companies highlighted below aren’t quite as dramatic. But they’re nonetheless clear evidence these Portfolio picks are still very healthy and growing. That’s ultimately a formula for higher share prices and dividends.

Artis REIT’s (TSX: AX-U, OTC: ARESF) third-quarter funds from operations exploded upward 29 percent from year-ago levels and 7 percent sequentially from the second quarter. That’s the latest evidence its aggressive expansion and geographic diversification of the past several years is paying off, and the best looks yet to come.

Revenue surged 69.8 percent, and net operating income rose 64.1 percent, as the company boosted occupancy to 96.3 percent including committed space. Tenant retention is running at a 78.8 percent for renewals, with an average weighted rent increase of 8 percent.

Re-renting is complete for 96.1 percent of properties with expiring leases in 2011, which comprised 7.6 percent of Artis’ total portfolio. It’s also complete for 31.6 percent of property where leases will expire in 2012, which is 7.5 percent of total space. Average weighted term on leases is 5.6 years. In-place rents where leases are expiring through 2012 are estimated 3 percent below market, making rent increases likely this year as well.

The REIT also slashed debt to just 51.9 percent of gross book value, down from 52.6 percent at the beginning of 2011. There are no debt maturities at the corporate level until May 31, 2013, when CAD29.9 million on a convertible bond comes due. Artis’ units will have to reach CAD17.25 per in order for the note to be worth converting. The entire cash outlay to pay it off, however, is only 2.7 percent of market capitalization and barely half its cash in the bank.

The biggest third-quarter improvement was in the payout ratio, which came down to 87.1 percent during the quarter from last year’s 112.5 percent. That doesn’t ensure an imminent dividend increase. But it does follow the trend of previous quarters, and it’s proof positive that management’s long-run growth strategy is working, i.e. high-quality properties on both sides of the border.

Artis was hard at work again during the quarter expanding its portfolio, adding two industrial and two office properties. The industrial properties are in Phoenix and Minneapolis, while the office locations were in Calgary and Winnipeg. The company also reported lease commitments for 44.3 percent of the space in two properties it’s redeveloping.

I look for more such deals going forward, as management uses the REIT’s deep pockets to snare quality properties, particularly from distressed owners. The units are still priced as though earnings are constantly at risk of a steep decline, should energy prices head south. That’s kept the yield over 8 percent, nearly twice that of Canadian REIT (TSX: REF-U, OTC: CRXIF), which is widely considered the sector’s bluest blue chip despite rarely trading in a bargain range.

At the current price it’s hard not to see Artis producing powerful returns going forward, as consistent and strong business growth inevitably move the units back to the upper teens. In the meantime, there are few if any stocks of similar high quality with such a high yield. Buy Artis REIT up to USD15 if you haven’t yet.

Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF) posted a 13.4 percent boost in its third-quarter revenue on a combination of organic growth and acquisitions. Cash flow rose 27.8 percent, 15.3 percent excluding a one-time restructuring charge last year and acquisition-related costs this year. Adjusted net income–the company’s primary measure of profitability as a corporation–came in at CAD0.4429 per share for the quarter, for a payout ratio of 70 percent including the recent 3 percent dividend increase.

Growth is the result of the company’s ongoing strategy to provide an expanding range of products and services to Canada’s rock-solid banking sector. The latest major growth move, the spring acquisition of Mortgagebot, has vaulted the company into the lead for web-based, point of sale solutions in North America, including the US.

In its third-quarter earnings statement management confirmed the numbers are “consistent with out expectations and we are satisfied with these results in the context of activities undertaken related to our strategic agenda.” The current revenue is mix is 42 percent cheque account programs, 21 percent loan registration services, 19 percent loan servicing, 13 percent lending technology with the remaining 5 percent a mix of smaller operations.

The level of economic activity in Canada affects all of these operations. As the company’s performance in 2008 showed, however, revenue is stable so long as Canada’s banks remain healthy. And with capital ratios still on very solid ground thanks to conservative lending practices this appears set.

Davis + Henderson’s return to dividend growth this year signals not only management’s intention to keep the payout rising. But these solid numbers also affirm it has the strength to do so as well.

The next major debt maturity is a CAD355 million credit line, on which CAD243 million was recently drawn but which won’t have to be rolled over until Apr. 12, 2016. Buy safe Conservative Holding Davis + Henderson–and its 7.4 percent yield, paid quarterly–up to USD20.

Extendicare REIT’s (TSX: EXE-U, OTC: EXETF) most important news in its third-quarter earnings release is the progress of its massive refinancing with the US Dept of Housing and Urban Development. The company has now refinanced USD360 million worth of property mortgages, or over 60 percent of the total, at an average weighted mortgage rate of 4.51 percent over 33 years. And management expects to wind up the remainder of the transactions by the end of January 2012.

That’s great news, as the company will need the interest savings and more to offset the drop in US Medicare payments announced over the summer. Third-quarter revenue rose 5.5 percent, excluding the impact of foreign exchange rate swings. Cash flow rose CAD10.1 million, excluding an increase in reserves for self-insured liabilities. Excluding the reserve adjustment, margins were 13.6 percent, versus 12.4 percent a year ago.

Adjusted funds from operations (AFFO) are the primary metric on which management bases dividend policy. Third-quarter results not including the reserve adjustment came in at CAD0.431 per unit, for a payout ratio of just 48.7 percent. Including the adjustment, nine-month AFFO still covered the payout, though at a higher ratio of 91.3 percent.

Encouragingly, these results affirm management’s success at adjusting to the Medicare cuts that rolled back last year’s boost in payments to senior care centers, and then some. That includes a CAD54 million pre-tax impairment charge that takes into account the loss of earnings power due to the Medicare cuts as well as a projected further 2 percent drop in revenue due to further cost-cutting resulting from mandatory US government budget cuts.

As a result the board of directors “has made a determination to maintain dividends at the current level.” The current estimated cash flow impact for the change in the rules on the company’s bottom line is USD50 million to USD56 million. That’s down from the initial estimate of USD70 million to USD80 million and is thanks to savings in general, administrative and non-wage operation costs of USD20 million to USD24 million. That’s in addition to USD18 million in projected annualized savings from the refinancing measures, driving the total impact on cash flow from the Medicare cuts down to USD32 million to USD38 million.

That’s on the high end of what management has previously forecast. And it should be further offset by continued steady growth in Canadian operations, which boosted cash flow 6.2 percent in the quarter. There’s also the potential for further savings on the operations front. And the company is increasing its presence in skilled segments, which should reduce fallout from potential future Medicare cuts.

In another key development, Extendicare approved the conversion of the REIT to a corporation. The move will have no impact on the current dividend or dividend policy in general, but it could half further cut the company’s cost of capital. In fact, it will eliminate the15 percent withholding tax currently paid by US investors who hold the units in IRAs, as it will trade as an ordinary common stock.

And it won’t result in additional taxes either, as the REIT has to date been fully taxed as a “specified investment flow-through” entity, or SIFT, and at a higher rate than ordinary corporations. The company expects to make the move by mid-2012, assuming it can get a two-thirds affirmative vote from current unitholders.

The stock has come well off the lows it hit in early October but still yields well north of 11 percent, reflecting investor fears of a pending distribution cut. That could indeed happen in a worst-case on the Medicare front. But management is also well aware of the situation and has proven its ability to adapt. The anticipated 2 percent cut in payments from the US government deficit reduction, for example, is anticipated to shave 7 cents per share off the bottom line, which still leaves a solid level of support for the dividend.

In any case, the bar of expectations is low with a dividend cut already priced in, despite the fact that management still has the will and resources to avoid one. Extendicare remains a buy up to USD10.

Just Energy Group Inc’s (TSX: JE, OTC: JUSTF) fiscal second-quarter results were right on target with the guidance management issued last month. As Chairman of the Board Rebecca MacDonald and CEO Ken Hartwick affirmed during the company’s conference call, growth is running ahead of the 5 percent per share growth target for gross margin and cash flow.

The company boosted its base of gas and electricity customers by 8 percent from year-earlier levels. The second-quarter pace of 45,000 net additions was slightly ahead of the 44,000 in the first quarter, demonstrating its ability to win business even with natural gas and wholesale power prices at multi-year lows. Low prices make it more difficult to win customers from current suppliers.

They also cut into margins, which Just Energy locks in by hedging prices of energy and other costs. Nonetheless, the company still lifted its gross margin by 4 percent a share, while lifting per share cash flow 25 percent. The payout ratio based on distributable cash flow fell to just 91 percent, from 113 percent a year ago.

The company’s success in recent quarters is in large part due to acquisitions of retail energy operations of rivals in the Northeast and Texas. These deals have been immediately accretive to cash flow. So has the very successful marketing the “JustGreen” and “JustClean” products to new and existing customers. These are programs that promise users a certain percentage of their demand will come from some form of renewable energy. They cost more but are wildly popular and provide superior margins to the company.

Bad debt is always a risk for retail marketers of energy. Only 48 percent of Just Energy’s sales, however, are so vulnerable. And the company was able to reduce the rate of loss on those sales to 2.5 percent from 2.6 percent a year ago, despite the dramatic expansion of its customer base. Attrition rates in Canada–basically the percentage of customers who switch to another provider–fell from an annualized rate of 10 percent during the quarter from 12 percent a year earlier. US electricity attrition fell to 14 percent from 15 percent.

US natural gas is the area most affected by the housing and employment crisis. But here, too, there was marked improvement in the quarter, as attrition fell to just 21 percent from 27 percent a year earlier.

Those are all favorable trends that will lift sales and margins should they continue as expected. The acquisition of Fulcrum, completed Oct. 3, will provide a solid lift to fiscal third-quarter earnings, which the company will likely report in early February.

These results clearly show Just Energy is on the right track and that investors’ perceived risk to the dividend is wildly exaggerated. The stock has been among the weakest performers in the Canadian Edge Portfolio this year for that reason.

Unfortunately, there’s no way of knowing exactly when the current gloomy perceptions will improve to better match the company’s solid numbers. These results, however, should set investors’ minds at ease that the dividend is indeed secure, even that this company is able to grow despite the challenges of its markets. Note there are no significant debt maturities until Dec. 31, 2013, when the company will have to roll over a largely undrawn CAD350 million credit line.

Yielding well over 11 percent, Just Energy is a buy up to USD16 for those who don’t already own it.

Northern Property REIT (TSX: NPR-U, OTC: NPRUF) turned in another very strong set of numbers. Third-quarter revenue moved 15 percent higher, funds from operations per stapled share ticked up another 4 percent and the payout ratio declined to 60.9 percent from 64.1 percent a year ago.

Underlying numbers were also very positive, as vacancy loss was just 4.8 percent versus 5.3 percent a year ago and 5 percent in the second quarter of 2011. Same-door net operating income growth–which excludes acquisitions–was a solid 3.6 percent. And the company benefitted from several acquisitions as well, with the September CAD79 million Iqaluit portfolio takeover set to boost fourth-quarter results.

These results show the REIT is continuing to execute well on its long-run strategy of adding first-rate properties in niche markets where it faces little or no competition. The biggest uncertainty remains the Jul. 20 proposal by Canada’s Minister of Finance Jim Flaherty to impose special taxation measures on staple unit structures.

The good news is the provision was not included in the federal budget recently “tabled” (submitted). That ensures there will be no change in the law for the foreseeable future. And the REIT plans to continue operating as it has as a result.

The unit price has bounced back sharply from a low of USD23.67 in early October. But it’s still well below my buy target if USD30, despite one of the healthiest businesses of any REIT in North America. Buy Northern Property REIT if you haven’t yet.

Third-Quarter Earnings Dates

Here are the confirmed and expected reporting dates for the rest of the Canadian Edge Portfolio, including links to articles with my analysis for those that have already submitted numbers. Note that most companies announce earnings after the close on the date shown, with a conference call the following morning.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Oct. 27 Flash Alert
• Artis REIT (TSX: AX-U, OTC: ARESF)–Nov. 9 Flash Alert
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Nov. 11 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Nov. 23 (estimate)
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPUF)–Nov. 9 (confirmed)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Nov. 8 Flash Alert
• Capstone Infrastructure Corp (TSX: CSE, OTC: MCQPF)–Nov. 14 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Nov. 10 (confirmed)
• Colabor Inc (TSX: GCL, OTC: COLFF)–Oct. 18 Flash Alert, November Portfolio Update
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Nov. 9 Flash Alert
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Nov. 8 Flash Alert
• Extendicare REIT (TSX: EXE-U, OTC: EXETF)–Nov. 9 Flash Alert
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Nov. 10 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Nov. 9 (confirmed)
• Just Energy Group Inc (TSX: JE, OTC: JUSTF)–Nov. 9 Flash Alert
• Keyera Corp (TSX: KEY, OTC: KEYUF)–November Portfolio Update
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Nov. 9 Flash Alert
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)–Nov. 9 (confirmed)
• Provident Energy Ltd (TSX: PVE, NYSE: PVX)–Nov. 9 (confirmed)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Nov. 8 Flash Alert
• TransForce Inc (TSX: TFI, OTC: TFIFF)–November Portfolio Update

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–Oct. 27 Flash Alert, November Portfolio Update
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Nov. 14 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–November Portfolio Update
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)– Nov. 9 (confirmed)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–Nov. 11 (confirmed)
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)–November Portfolio Update
• Enerplus Corp (TSX: ERF, NYSE: ERF)–Nov. 10 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–November High Yield of the Month
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–November Portfolio Update
• Penn West Petroleum Ltd (TSX: PWT, NYSE: PWE)–November High Yield of the Month
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Nov. 9 (confirmed)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–November Portfolio Update
• Student Transportation Inc (TSX: STB, OTC: STUXF)–Nov. 10 (tentative)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Nov. 8 Flash Alert