The Canadian dollar is back below parity with the US dollar, at about 97 US cents. Oil prices right at USD80 per barrel. And every Canadian Edge Portfolio Holding is below my recommended buy-up-to price.

That includes Keyera Corp (TSX: KEY, OTC: KEYUF), whose target I’m raising from USD38 to USD43 after digesting the results of its Sept. 13 investor presentation. The growth of this company’s presence in natural gas liquids continues to set the stage for robust, long-term dividend growth. And as CEO Jim Bertram pointed out in the presentation, the company is uniquely set up to take advantage of sub-USD4 natural gas prices.

Producers can only drill liquids-rich gas at that price, which raises demand for Keyera’s NGL infrastructure. The company has another CAD100 million to CAD130 million in expansion projects slated for the rest of 2011, which will start to add to cash flow next year. And with Canada’s chemicals business gearing up to use more ethane, there’s plenty more growth where that came from.

The reason so many companies are once again trading below my buy targets is, of course, that share prices have given up considerable ground. Canadian stocks and the loonie’s exchange value are holding up far better than they did in 2008, or even 2010 when fear of another 2008 temporarily roiled the markets.

But on those days when investors are most worried about the economy, they’re unloading Canadian stocks just as they would any other dividend-paying equities. And because the Canadian dollar also gets hit, US investors are hit with a double dose, which means wider losses.

Again, what we’ve seen since early August doesn’t come close to matching the carnage of 2008, or even 2010. But it has been enough to knock most of our stocks down a notch, even in Canada where the banking system is solid, the government is near fiscal balance and the economy is generally less levered than in the US.

The bad news is outside of US Treasury bonds–still the world’s safe haven of choice despite S&P’s dubious downgrade–there really are no shelters from volatility. On the bad days, even your best stocks are likely to get hit. And chances are anything you have that’s higher out on the risk spectrum will sell off even more.

That’s going to be too much for some investors to bear. And their selling now of good stocks will have as many tragic consequences for their financial well-being as it will further spur market volatility.

The important thing to remember in times like these is that volatility is not the best measure of risk for income investors. The only way to get income is to buy and hold securities long enough to collect it. Doing that means we’re going to have ups and downs. But as long as companies’ underlying businesses hold up, their stocks will recover on the good days. And when at last the big issues are sorted, they’ll return to much higher ground.

Rather, true risk for the income investor is tied to the safety of dividends. Companies that can increase payouts over time are low risk. Those with less margin for error where dividends are concerned are higher-risk.

That’s why the most important task facing investors–and now more than ever–is to keep tabs on the health of your companies. Weak market and economic conditions do have the potential to trip up businesses, not just from lost sales or busted contracts with credit-challenged partners but also with unexpected changes in government regulation. But the majority of moves in a stock don’t have anything to do with anything serious. The key is knowing the difference, and acting accordingly.

Looking down the Canadian Edge Portfolio, we’ve seen a great deal of movement in most stocks since the September issue went to press on the 9th.. Little of it, however, had anything to do with the health of underlying companies.

One exception was Conservative Holding Brookfield Renewable Power Fund’s (TSX: BRC-U, OTC: BRPFF) proposed combination of its assets with those of Brookfield Asset Management’s (TSX: BAM/A, NYSE: BAM) remaining renewable energy portfolio. The move creates the world’s largest renewable energy generation pure play, Brookfield Renewable Energy Partners LP, with massive upside for future generation.

The deal will immediately lift the Fund’s distributable cash flow per unit by about 10 percent. That, in turn, will return Brookfield to dividend growth, with an initial boost to an annualized rate of CAD1.35 per unit–up from the current CAD1.30–when the deal closes. After that, management projects annual growth of at least 3 to 5 percent, as the company continues to add assets.

A vote on the deal is slated for Nov. 2011, and CE readers should vote “yes.” The new Brookfield will have enhanced ability to grow that’s even better protected against economic ups and downs. With bigger and more reliable total returns on tap, I’m raising my buy target on Brookfield Renewable Power Fund to USD25 for those who don’t already own it. Note the company also plans a New York Stock Exchange listing shortly after close.

Another is Student Transportation Inc (TSX: STB, NSDQ: STB), which announced its fourth quarter and fiscal 2011 results today. Highlights included a 14 percent jump in full-year revenue and cash flow margins at the higher end of the company’s historical range at 19.6 percent.

The key was the company’s continued ability to win new contracts, particularly in the US. To that end, management was able to close 10 new contracts and four acquisitions before the start of school year 2011-12. Fourth-quarter revenue moved up 15.6 percent, while cash flow rose 4.1 percent. And the new contracts lock in a 12 percent year-over-year revenue increase the next 12 months.

Like most CE Portfolio stocks, Student Transportation generally pays dividends out of cash flow rather than earnings per share. We’ll be hearing more about this breakdown when the company holds its conference call on Monday morning. But based on these numbers, there’s solid dividend coverage and even potential for a boost in the coming months.

Student Transportation stock surged following my recommendation in early August and leading up to its Nasdaq listing in early September. It then seemed to stumble at bit following the announcement that a former executive was starting up a potential competitor. Given these numbers, however, the selling looks a little overwrought and the company’s 9 percent-plus yield seems a real bargain. My advice remains to buy Student Transportation up to USD7.