So far this week five more Canadian Edge Portfolio companies have reported earnings. None disappointed, all covered dividends and backed balance sheets strongly, and all five pointed to robust growth in 2012. All five are strong buys up to listed target prices, for those who don’t own them yet.

Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF) posted full-year funds from operations per share of CAD1.60. Revenue jumped 12.2 percent, as improved hydrology conditions lifted output 9.6 percent. Funds from operations covered the current distribution rate comfortably, even though it’s been raised twice since October 2011, with a payout ratio of 86.3 percent. And the payout ratio was just 63.1 percent based on long-term average generating conditions.

US hydro generation was up 8 percent versus 2010 and 5 percent better than long-term average conditions. Canadian output was 14 percent better than last year, though 20 percent below long-term averages. Brazilian production was 3 percent better than 2010 and in line with averages. Hydropower was 91.4 percent of generation, with the balance primarily wind. Fourth-quarter power output overall was 4 percent below last year and 8 percent off long-term averages.

At its core Brookfield Renewable is an asset-growth story, and it continued to make solid progress on this front. The company started up two hydro facilities and two wind plants last year with combined total value of CAD1 billion and acquired another 223 megawatts of wind generation in California. All will generate their first full quarter of cash flow in the reporting period ending Mar. 31, 2012. Management also received regulators’ approval on environmental grounds for another 45-megawatt dam in British Columbia that will begin construction in 2012.

Increased generation capacity means higher cash flow and distributions. Management has targeted a payout ratio of 60 to 70 percent of funds from operations and a long-term distribution growth rate of 3 to 5 percent. A CAD400 million offering of 10-year notes at a rate of 4.79 percent demonstrates its continued access to low-cost capital.

Brookfield Renewable’s conversion to limited partnership last year apparently sowed confusion with certain US brokers. Some investors were told they could no longer buy or hold the company’s shares, while others have become concerned about tax implications. All those worries should be set to rest by the company’s planned listing on the New York Stock Exchange (NYSE), which management says will take place by the end of March. The company also intends to introduce a dividend reinvestment plan, which presumably will also be available to US investors. I’ll keep you posted.

In the meantime, the business is expanding as never before. Plants are running well and are almost fully contracted for years to come. The balance sheet is sound, and dividends are safe and growing. The units are trading slightly above my buy target of USD26. In light of these results, I’m raising my buy target for Brookfield Renewable to USD27, for those who don’t already own the stock.

Noranda Income Fund (TSX: NIF-U, OTC: NNDIF) lifted its fourth-quarter cash from operating activities by 5.9 percent to CAD18 million. That covered the CAD0.04167 per month distribution by nearly a four-to-one margin, allowing management to slash debt by another CAD37 million to CAD98.7 million.

Earnings before finance costs and income taxes surged 25.6 percent, as higher revenues from zinc byproducts, processing fees and product premiums offset lower zinc metal sales and higher labor costs. US manufacturing, a primary source of demand, remained solid and kept zinc demand on track for steady growth in 2012, despite a slowdown in Europe and uncertainty about China.

Left unanswered were questions about future dividends. This policy has been the subject of a dispute between major independent shareholders and management, which answers to owner and operator Xstrata Canada. The processing facility from which Noranda’s royalties flow is under a supply contract that runs out in 2017 with Xstrata Canada.

Management’s approach to date–also Xstrata Canada’s–has been to use all excess cash flows now to retire all remaining debt at the Fund, should the facility be permanently shut. Major shareholders, meanwhile, contend the odds of a shut-in are remote and that abundant excess cash should be used to restore dividends to their original level at Noranda’s initial public offering, which is CAD0.085 per month versus the current CAD0.04167.

To settle these questions, Noranda’s board in November formed an independent committee. The company’s fourth-quarter “management discussion and analysis” report, or MD&A, states it’s now received a “preliminary report” on the issue. Statements from key executives confirmed findings during the company’s fourth-quarter conference call.

Takeaway one is that if the fund is able to secure zinc concentrate after May 2017 it “could operate very profitably” well into the future. The report stated “it would be prudent for the Board, through its Independent Committee, to identify possible alternative sources of zinc concentrate post-2017,” if the Xstrata Canada deal is not renewed.

Xstrata Canada, which provides the facility with zinc, is required to advise the Partnership by November 2016 if it intends to end the contract. Otherwise, the deal will be automatically renewed for another five years. The genesis of the current dispute is Xstrata’s attempt to buy out Noranda shareholders at a price barely half the current level in 2010. Major independent shareholders blocked that bid and have since been vindicated by the company’s earnings recovery. But the tension remains.

Based on the language in the MD&A, there’s no indication the board will immediately change its mind about essentially paying off all of Noranda’s debt by the end of 2016. And it seems determined to continue collecting reserves should the facility have to be shut down.

As a result, until the independent committee makes its final report, dividends are unlikely to change for the better. But combined with these results, the report’s finding that that the facility could run profitably past 2017 keeps this issue very much alive. And with the company steadily building its cash reserves and paying off debt, the current distribution rate looks increasingly solid.

The stock is slightly above my buy target of USD6. Until there’s more clarity on the future dividend–as well as a possible conversion to a corporation–this is where I’m keeping it for new investors. Note that Noranda is not a conservative income investment, but a bet that major shareholders will gain concessions from Xstrata Canada. Those looking for a stable dividend should go elsewhere.

Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF) affirmed its intention to lift its monthly distribution 3.8 percent once its proposed merger with Provident Energy Ltd (TSX: PVE, NYSE: PVX) closes. That deal has encountered no real regulatory opposition or otherwise, and should close shortly after shareholder votes slated for Mar. 29.

Meanwhile, Pembina’s fourth-quarter cash flow from operating activities rose to CAD0.44 per share, up by roughly one-third from year-earlier totals. That covered the proposed new distribution rate of CAD0.135 per month by a solid 1.09-to-1 margin, or a payout ratio of 92 percent). Earnings before interest, taxes, depreciation and amortization (EBITDA) were CAD0.52 per share, up from CAD0.48 a year earlier.

Full-year totals for adjusted cash flow from operating activities were CAD1.78 per share, up 15.6 percent from last year’s CAD1.54. That covered last year’s dividend rate by a 1.14-to-1 margin (a payout ratio of 87.6 percent), and the proposed, post-merger 2012 rate by a 1.1-to-1 margin.

The Midstream & Marketing business provided a solid lift, boosting operating margin 91.1 percent on higher pipeline volumes, stronger pricing for liquids and cost management. Oil sands transportation profit surged 36.7 percent, due largely to the startup of the Nipisi and Mitsue pipelines. And the company’s gas services business enjoyed 16 percent higher volume from the Cutbank Complex. That was offset by slightly lower margins at the conventional pipelines, which faced temporarily higher maintenance and electric power costs.

Pembina Pipeline, like Brookfield Renewable, is fundamentally an asset-growth story. And the company kept its favorable dynamics in place last year with CAD526 million in capital spending, the vast majority of which was directed at natural gas liquids, oil and oil sands assets. The company also acquired storage assets in the Edmonton area that will enhance its ability to take advantage of pricing swings through its marketing operations.

Pembina plans to spend a record CAD550 million on projects in 2012 to lift growth. This is in addition to what will flow from the Provident Energy merger. And it’s plenty to assure targeted growth in cash flow and distributions, which management pegs at 3 to 5 percent a year.

My only problem with Pembina is price. After a brief dip in January, the stock is once again back above my buy target of USD27. My advice for those who haven’t bought in yet is to be patient. When the Provident merger closes, we could see some selling as institutions reposition, which could give us a better entry price.

And whether that happens or not, a close will settle uncertainty and lock in dividend growth, which will increase the underlying value of the stock. Until then, buy Pembina Pipeline only on dips to USD27 or lower.

RioCan REIT (TSX: REI-U, OTC: RIOCF) posted a 20 percent boost in fourth-quarter funds from operations. That was a 9 percent boost per unit to CAD0.36, bringing the payout ratio down to 95.8 percent. The full-year payout ratio was 96.5 percent, on an 8 percent jump in per-unit funds from operations.

I’ve tolerated a rather high payout ratio for RioCan in recent years for several reasons. One is the stability and growth of its operating portfolio, underscored by a 97.6 percent fourth-quarter 2011 occupancy rate, up from 97.4 percent a year ago. The REIT’s retail center portfolio also enjoyed very strong rent growth of 14.5 percent on renewing leases during the quarter as well as an 11 percent boost for the full year. Meanwhile, same-store profits–which exclude acquisitions–were up 1.9 percent in Canada, 1.2 percent in the US.

Second, management continues to find ways to add to its base of highly productive assets on the cheap, locking in superior returns. RioCan’s longstanding policy is to not only focus on the highest-quality tenants but to ensure no one company accounts for more than 5 percent of its overall revenue. This figure is currently just 4.7 percent and insulates income from economic dislocations. And the REIT’s position as Canada’s largest retail property owner gives it the pick of the litter in terms of current and potential partners.

RioCan’s tight relationship with Wal-Mart (NYSE: WMT) has long been a mainstay, with the latter an “anchor tenant” for its properties in both the US and Canada. It’s also recently increased its relationship with Target (NYSE: TGT) and Tanger Factory Outlet Centers Inc (NYSE: SKT). Acquisitions exceeded CAD1 billion in calendar 2011 for the second consecutive year, well above the initial target of CAD600 million.

Finally, RioCan’s high payout ratio in recent years has been largely due to temporary dilution from its expansion program. That is, management has been continuously raising debt and equity capital at extremely low rates to fund construction and acquisitions. This has led to a large amount of cash on its books, as well as more shares before income has caught up. That’s depressed funds from operations in the near term, though the investment has quickly spurred cash flow.

The really good news from RioCan’s fourth-quarter results is that they fully indicate further growth and lower payout ratios ahead. Speaking during his company’s fourth-quarter conference call this week, Chief Operating Officer Raghunath “Rags” Davloor forecast CAD600 million of additional acquisitions for 2012, as well as 1 to 1.25 percent same-store growth. He also affirmed RioCan would be “in a position…at the end of 2012 to be able to recommend to our board” a dividend increase, based on being “pretty bullish on 2013 and 2014.”

Based on statements made accompanying these results, management sees much opportunity to grow in this environment. This makes it more likely to continue deploying capital to business growth rather than distribution increases this year. As a result, I’m leaving my buy target right where it is at USD25, until there is an increase. But RioCan is a strong buy on any retreat to that level or lower.

Student Transportation Inc (TSX: STB, NSDQ: STB) posted a 24.4 percent boost in fiscal 2012 second-quarter sales, keying a 19.5 percent jump in cash flow. The catalysts were asset and contract additions announced last year, which were offset partly by a 30 percent bump in fuel costs and revenue deferrals due to weather.

Taxable net income was lower on the timing of non-cash expenses but is basically irrelevant to either underlying profitability or dividend safety. The company also reported a loss in taxable income for the first six months of the fiscal year, due mainly to currency hedging that’s also irrelevant to profitability. Chairman and CEO Denis J. Gallagher underscored that statement with the release, stating “these non-cash, non-operational adjustments to net income do not affect our contracted cash flows.”

Using cash flow less interest expense and taxes as a measure of profits, the payout ratio for the quarter came in at just 44.6 percent. This seems unlikely to trigger an immediate dividend increase, particularly as the company focuses on expanding its franchise in a growth-friendly environment. Budget pressures are forcing growing numbers of school systems to outsource bus services. This trend looks set to accelerate in 2012, and management, understandably, wants to take advantage.

Cash flow, however, is set to continue to rise as the company moves deeper into the USD18 billion market that’s still dominated by some 10,000 school districts in the US. The company’s growth focus this year is on the Southeastern US, where South Carolina is debating a bill to force privatization of systems.

That bill has strong odds of passage by summer. And management believes there’s a groundswell for similar action in the even more potentially lucrative Florida market as well as in Alabama, Georgia and Virginia. The company is also exploring “direct pay” ways to boost cash flow, including offering on-the-bus Wi-Fi, parent alerts and feedback advertising.

Fuel costs remain a variable, but Student Transportation is limiting the risks they pose by locking in prices with hedging. Some 60 percent of contracts now have fuel-cost mitigation built into them, while the company has now an additional 20 percent of its fuel costs hedged at favorable prices. It’s also completed some financing in US dollars, which provides a natural hedge against currency swings at its US operations.

Gallagher projects full fiscal 2012 margins to hit the “typical margin range” of 18 to 20 percent. Coupled with further opportunities for growth–including 6 percent growth from organic projects alone–there’s plenty of promise to keep revenue and cash flow rising at a robust pace. And with CAD400 million of potential new revenue opportunities in process, this could actually prove conservative.

Student Transportation shares are currently selling for slightly more than my buy target of USD7. The yield is still generous at that level. But given the stock’s steep rise since October, I’m not inclined to raise it until there is a dividend increase. Buy Student Transportation up to USD7 if you haven’t yet.

Note that buying the Nasdaq-listed shares gives you the same currency play as purchasing in Toronto. The US dollar value of your dividends and share price will still rise with the loonie.

Numbers to Come

Here’s the latest on when to expect numbers from the rest of the Canadian Edge Portfolio Holdings. I’ll continue to feature results in Flash Alerts as they appear, and I’ll provide a comprehensive review in the March issue.

Remember, I don’t send out Flash Alerts for companies not in the Portfolio. I will report on results for non-Portfolio companies under How They Rate coverage in the March and April issues. For payout ratios see How They Rate.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Mar. 8, 2012 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Mar. 14, 2012 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Feb. 29, 2012 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Mar. 2, 2012 (estimate)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPUF)–Feb. 15, 2012, Flash Alert
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Feb. 28, 2012 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Feb. 9, 2012, Flash Alert
• Colabor Inc (TSX: GCL, OTC: COLFF)–Mar. 8, 2012 (estimate)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Mar. 6, 2012 (confirmed)
• Dundee REIT (TSX: D-U, OTC: DRETF)–Feb. 22, 2012 (confirmed)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Feb. 24, 2012 (confirmed)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Mar. 21, 2012 (estimate)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Mar. 23, 2012 (estimate)
• Just Energy Group Inc (TSX: JE, OTC: JUSTF)–Feb. 9, 2012, Flash Alert
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Feb. 16, 2012 (confirmed)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Mar. 13, 2012 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)–Feb. 15, 2012, Flash Alert
• Provident Energy Ltd (TSX: PVE, NYSE: PVX)–Mar. 6, 2012 (confirmed)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Feb. 15, 2012, Flash Alert
• Shaw Communications (TSX: SJR/B, NYSE: SJR)–Jan. 12, 2012, Flash Alert
• Student Transportation Inc (TSX: STB, OTC: STUXF)–Feb. 15, 2012, Flash Alert
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Feb. 29, 2012 (confirmed)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–Feb. 7, 2012, Flash Alert
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Mar. 14, 2012 (estimate)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Feb. 9, 2012, Flash Alert
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Feb. 23, 2012 (confirmed)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–Mar. 16, 2012 (estimate)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–Feb. 24, 2012 (estimate)
• Extendicare REIT (TSX: EXE-U, OTC: EXETF)–Feb. 29, 2012 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Feb. 15, 2012 (confirmed)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–Feb. 15, 2012, Flash Alert
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Mar. 14, 2012 (estimate)
• Penn West Petroleum Ltd (TSX: PWT, NYSE: PWE)–Feb. 16, 2012 (confirmed)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Mar. 9, 2012 (estimate)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–Mar. 7, 2012 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Feb. 29, 2012 (estimate)