All but a tiny handful of Canadian trusts and high-yielding corporations have now reported their second quarter results. That includes all Portfolio recommendations, which were recapped in the previous Flash Alert.

I’ve now updated payout ratios in the How They Rate table and will have full analysis in the September Canadian Edge, which will be available Friday, September 4.

The primary takeaway from this round of results is that companies that trusts that did well in prior quarters did so again. That’s not too surprising, given that the Canadian economy’s downturn moderated. But it’s also a testament to the ability of strong businesses to weather even the most difficult environments.

Meanwhile, the continued rally in well-run trusts and corporations is affirmation that the investment strategy of buying and holding good businesses is what works.

A second takeaway is that Canadian energy trusts in general appear to have established conservative financial policies earlier this year that will enable their dividends to withstand the current weak environment for natural gas prices. Gas hit a seven-year low this week, and with inventories still bloated in North America it could well stay weak for some months yet.

I remain bullish on the fuel. Supply destruction continues, and in fact has intensified as prices have fallen. That means any semblance of a return to normal demand will soak up current oversupply quickly. And that’s not even factoring in the possibility of severe weather or any kind of weather event in the Gulf.

More important, however, second quarter cash flows at trusts like Enerplus Resources (TSX: ERF-U, NYSE: ERF) covered distributions comfortably. In fact, Enerplus covered dividends plus cash flow by a large margin. The fund is clearly loaded for bear, and that’s reason to expect the shares are going to be stable and the dividend safe as long as this downturn lasts.

Some investors have asked me about Penn West Energy Trust (TSX: PWT, NYSE: PWE), which was the target of a couple of opinion pieces regarding its dividend over the past couple of weeks.

The trust did report some good news in the second quarter, including expectations-beating production and debt reduction. That led to speculation that a dividend increase might be in the offing, which was in turn answered by speculation that management was contemplating a big dividend cut as it converts to a corporation in 2011.

For its part, Penn West management has confirmed it will convert to a dividend-paying corporation when the tax law changes. As management has stated, however, what it will pay will depend almost entirely on where energy prices are.

The additional tax will obviously reduce the amount of cash flow that the company can distribute to shareholders. But the impact is inconsequential compared to, for example, the effects of a USD10 change in oil prices or USD1 move in natural gas.

That’s what we need to keep our eye on. And note that Penn West, like many other producer trusts, trades at a steep discount to the value of its assets in the ground and is arguably already pricing in a dividend cut from here.

I continue to recommend Enerplus Resources and Penn West Energy Trust–as well as the rest of my producer trusts–as buys for those who don’t already own them. For the rest of us, it definitely pays to keep those positions.

Elsewhere in the Portfolio, Atlantic Power Corp (TSX: ATP-U, OTC: ATPWF) announced the sale of its interest in a gas-fired plant in Georgia for cash. The plant wasn’t slated to produce cash flow for Atlantic for at least several years and unloading it frees up cash for other ventures.

It’s just another demonstration of management’s ability to maximize the value of its portfolio and another reason to buy Atlantic Power Corp up to USD10 if you haven’t already. Note that Atlantic Power is a corporation, not a trust, and therefore has no 2011 exposure.

Consumers’ Waterheater Income Fund (TSX: CWI-U, OTC: CSUWF) got a decision from Ontario regulators on its appeal of a case restricting its ability to operate its sub-metering business.

The ruling was considerably more favorable than the prior one, which effectively barred Consumers from doing business. But it also contains several provisions that will have an uncertain impact on the trust’s future cash flow, notably a requirement that tenants in apartment complexes must be asked individually for permission before landlords can install smart meters.

Consumers’ management believes that will affect only 1 percent of current customers. But it will make it more difficult to grow the business than if the trust were able to simply approach landlords. There’s also a debate raging in the province about whether only regulated utilities should be able to perform the service.

My feeling is this is a good ruling and that Consumers will be able to get back into this business in a big way. That in turn will spark up cash flow and makes a sizeable dividend in 2011 a certainty when Consumers’ converts to a corporation.

On the other hand, this sub-metering business could still prove the company’s undoing, if sub-metering regulation proves to be more of a problem than it now appears.

The bottom line is I want to see more numbers for Consumers’ before I upgrade it again to a buy. I’m on board with letting current bets ride, given the very low price and the fact that the units are pricing in a dividend cut. But there are better places for new money now, or at least until the sub-metering situation clears up; hold Consumers’ Waterheater Income Fund.