Parkland Income Fund (TSX: PKI-U, OTC: PKIUF) became the final Canadian Edge Portfolio holding to announce second-quarter earnings last week. And they were numbers worth waiting for.

Fuel sales volumes and margins rose 28 percent, fueling cash flow growth of 19 percent versus year-earlier levels. The key was the integration of the Bluewave acquisition. Management states this is now in the “sustainment” phase and expects to exceed its full-year target of CAD2 million in cost savings.

Company-wide, distributable cash flow (DCF) exceeded the distribution by 14 percent in the quarter and 11 percent for the six months ended June 2010. That margin is expected to improve going forward, as the company at last realizes the benefit of efficiency measures and commercial fuel sales volumes rebound, in large part thanks to an ongoing recovery in the forestry business.

On the negative side, growth in Ontario was offset to some extent by continued weakness in Alberta. Net sales in the convenience store merchandise segment fell 54 percent, but that was due to conversion of corporate operated sites to commission-generated dealer operated ones. Sales of non-fuel products rose 15 percent over year-earlier levels, triggering a gross margin gain of 46 percent in that division.

Parkland’s cash flows are affected by energy prices in one major way: A substantial share of profit is derived from refiners’ margins. These remain on the low side, as energy prices have remained relatively high and demand for refined products soft. Margins for diesel, for example, are still low due to excess capacity. Strength in areas like forestry, however, promises to trigger an improvement in coming quarters for the fuel, as well as other refined petroleum products.

In its report, Parkland affirmed its plans to convert to a corporation ahead of 2011 taxation and to pay a post-conversion dividend between 75 and 110 percent of the current level (CAD1.26 per unit annually). At current prices that’s a yield of roughly 9 percent in a worst-case, about 13 percent in a best-case. My own forecast is for a final dividend between 85 and 90 percent of the present payout, which should produce a solid capital gain for the stock.

Management plans to announce a final decision on the post-conversion dividend when it releases third quarter earnings, most likely in November. In the meantime, Parkland Income Fund is a bargain up to USD13.

As for the rest of the CE Portfolio, prices of recommendations have generally backed off from recent highs, largely a consequence of growing investor fears about a double-dip recession in the US. Several, however, remain above my buy targets, including long-time favorite Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF). If you’re still light on these, be patient. In this volatile market, prices more often than not will come back to you. And you don’t do yourself any favors by chasing anything higher.

Conversely, this is not a time to play defense. Positions in good stocks can lose ground in a hot-headed selloff, and we’re still very much in the kind of market where bonds move one way and stocks–including dividend payers–go the opposite. But as long as the underlying business is solid, these drops are always short-lived.