There are still plenty of companies posting solid earnings and paying dividends. The problem is it doesn’t seem to matter. High-quality companies and deadbeats alike are being taken out and shot in a market that doesn’t care about actual business numbers, only the latest headline concerning the broad economy or politics.

Since this bear market began in summer 2007, my approach has been to stick with companies that have held together as businesses. The rationale is simply that if a company stands up to the stress tests amid this economic turmoil, it will recover its stock market losses in short order when macro conditions improve. And as for Canadian trusts of all varieties, we’ll continue to receive generous distributions while we wait.

Over the long haul, the stock market is a weighing machine. Healthy, growing businesses eventually gain the market value they deserve. In the short term, however, stock prices are basically determined by a popularity contest. And unfortunately, the only investment truly loved now is cash, and possibly US Treasury securities.

As long as we’re in this dangerous and volatile environment, investors will be tempted to throw in the towel, no matter what they own. After all, as one reader reminded me this month, what good is a dividend if a company’s share price falls more than the payout?

That’s a hard argument to counter. In fact, that’s a big reason why I advise against buying the highest-yielding security in a given sector. An abnormally high yield is more often than not a sign of extreme risk. Even if the dividend isn’t cut, the share price is always vulnerable to declines far greater than the payout.

On the other hand, if a high dividend is maintained through the hard times, the skepticism will eventually vanish, and so will the risk premium investors require. Those who own the security will receive high income and recover losses as the underlying stock or trust moves higher.

That’s the way it’s played out in the aftermath of every bear market prior to this one. And it’s why it’s so critical to keep holding shares of companies and trusts paying high yields that are backed by still-healthy businesses.

The recovery could begin next week, or it could take months or even years to unfold. But as long as the underlying companies hold it together, the buyers will come back. The risk premiums investors require now will vanish, as will losses.

The Road to Recovery

There are differences between this bear market and those that came before it. For one thing, this one has taken us further down faster than any other, including those that took place during the Great Depression of the 1930s.

The key question is whether the problems fueling the selling are so entrenched that they’ll eventually drag under even the strongest companies.

Some readers I’ve talked to are deeply worried about what the Obama administration will or won’t do. Others are skeptical the trillions of federal dollars pouring into the banking systems and broader economy will be enough to right the economy, or are concerned they’ll set off a cycle of stagflation. And some fear nations such as China will abandon their support for the US by dumping Treasury securities.

I don’t pretend to have all the answers. But I do have three basic observations. First, those who base major investment decisions on politics are running the risk of letting emotion get the better of them.

Staying on the sidelines just because you distrust Democrats, for example, would have kept you out of stocks during the 1990s, one of their best decades in history. Similarly, Republicans were in charge during the crushing bear markets of 1972-74, 1987, 2001-2002 and for the first 18 months of this calamity. And there are plenty of counterexamples as well, where Dems were poison and Republicans were the cure.

National politics can certainly affect investments in many ways. That’s one reason investors should have stakes in other countries, like Canada, as well as watch carefully what industries are advantaged by the stimulus package. But your focus as an investor must be on how your companies are doing, not the latest headline from Washington.

Second, many high-quality companies and trusts performed well as businesses during the fourth quarter of 2008. That includes all 14 of the Conservative Holdings to report thus far. And management in almost every case is guiding toward a solid 2009 as well.

Third, and most important, we’re already seeing companies that were left for dead in the marketplace bounce back after releasing numbers that convinced investors their underlying businesses are still healthy and growing. One great example: Energy Savings Income Fund (TSX: SIF-U, OTC: ESIUF).

Despite consistently strong profit growth, shares of the marketer of electricity and natural gas in the US and Canada were laid low in late 2008. Starting in mid-September, they sank from double-digits to a low of under USD5 in late November, as investors worried about the recession’s impact on the business and the fund’s ability to finance the dividend.

Then management released a statement that business was sound and holding up as well as any purveyor of essential services. It not only confirmed the safety of the distribution for the rest of 2008, but for 2009 and beyond. The trust also paid a special year-end distribution of CAD0.165, on the high side of its previously declared range.

Fiscal third quarter (ended Dec. 31, 2008) earnings further confirmed the trust’s underlying strength. Profit margins grew 23 percent and distributable cash surged 22 percent from year earlier levels as Energy Savings added 94,000 new customers in the US and Canada during the quarter.

Management also affirmed its full year 2009 growth guidance of 5 to 10 percent for margins and distributable cash flow, and the quarterly payout ratio fell to just 72 percent. Distributable cash after marketing expenses, meanwhile, rose 13 percent, a clear indication that it’s not over-spending to pick up business at the expense of profitability, even in this critically weak environment.

As for credit concerns, bad debt expense came in at the low end of the fund’s target range of 2 to 3 percent of revenue. That’s further confirmation that Energy Savings operates in an essential service business with utility-like strength, despite the fact that its markets are at least nominally competitive. And management confirmed it doesn’t bear bad debt risk in 75 percent of its markets, due to contractual arrangements. The company also cut interest expense by 25 percent, a clear sign it faces no credit pressures.

The result of all this good news: Energy Savings shares have surged nearly 80 percent off their lows in US dollar terms, and they’ve more than doubled in Canadian dollars. This is still the same company it was in November, weathering the recession and posting the numbers to prove it quarter after quarter. What’s changed for the better since is simply investors’ perception of its performance.

Selling at just 62 percent of sales and bearing a yield of nearly 12 percent, Energy Savings Income Fund is a buy up to USD10. And I fully expect the shares to revisit last year’s highs in the upper teens.

Equally important, this is exactly the same action I expect to see for every other Conservative Holding in the Canadian Edge Portfolio going forward. As long as they keep posting solid numbers, they’ll eventually regain investors’ confidence and their shares will recover. And that goes for even those that have been particularly hard-hit in this market. All we have to do is be patient and ensure they continue to perform.

The Aggressive Holdings are a somewhat different story, as recovery won’t occur until the economy improves and commodity markets rally. In the meantime, their challenge is to post numbers signaling their surviving the tough times.

Conservative Holdings: Safe Dividends

Last month, Bell Aliant Regional Communications Fund (TSX: BA-U, OTC: BLIAF) got fourth quarter 2008 earnings season off to a great start, posting solid numbers that affirm its business model is still intact. That’s basically upselling more customers to broadband and other advanced services than it loses to competition, cutting costs and buying back debt and stock. Buy Bell Aliant Regional Communications Income Fund up to USD25.

Since then, in addition to Energy Savings, 11 other Conservative Portfolio trusts and high-yielding corporations reported profits. And the numbers are no less positive, both for the growth of the underlying businesses and the safety of their distributions. Note Northern Property REIT (TSX: NPR, OTC: NPRUF) is highlighted as a March High Yield of the Month.

AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF) had another solid year of adding fee-generating assets in the power and energy extraction/processing industries. Fourth quarter funds from operations (FFO) per share surged 15.4 percent, as the trust successfully integrated the assets of Taylor Natural Gas Liquids and continued to build out its green power generation assets in western Canada, where electricity supplies remain severely constrained and environmental pressures are real.

The trust has already purchased a wind facility this year with the potential to add 100 megawatts of capacity, and it bought 5 percent of a geothermal energy company. Coupled with a recently renegotiated credit agreement, these moves are further proof the trust is experiencing no leverage problems in an otherwise tight market. That should ensure another year of solid growth for this trust, which has slipped back to a price of just 99 percent of book value and a dividend yield of well over 16 percent. Insiders continue to scoop up shares of low risk AltaGas Income Trust, a buy up to USD20.

Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF) rode a 2.8 percent increase in rents and high occupancy of 98.5 percent to another solid quarter. Management also cut operating expenses to 46 percent of revenue, down from 47.1 percent in 2007. And it completed several acquisitions of top-quality properties at low prices that will add to cash flow going forward.

Apartment owners in the US and Canada are typically the most recession-resistant of all REIT groups. Canada’s property market was never hit by subprime woes and so is much healthier than the US market (see Feature Article). But even if conditions were to worsen, CAP REIT’s diversification and focus on only the highest-quality properties will protect its cash flow and distributions, which were solidly covered by cash flow in the fourth quarter and for all of 2008. Now yielding well over 8 percent, Canadian Apartment Properties REIT is a buy up to USD15.

CML Health Care Income Fund (TSX: CLC-U, OTC: CMHIF) delivered another very solid quarter, with fourth quarter revenue surging 62.1 percent on the development and acquisition of new testing centers. The full year payout ratio was the lowest in several years, coming in at 85.9 percent after the May dividend increase.

Looking ahead, the newly inked Canadian rate deal and the fund’s expansion into the US will likely be the key drivers for 2009 cash flows. Management is also committed to making further acquisitions, provided they’re immediately accretive. The key challenge is continuing to get along with government regulators who oversee Canada’s national health care system and adapting to new regulations likely to be adopted in the US.

As I’ve pointed out, however, management has been up to the challenge before, and cash flows are proving exceptionally recession-resistant. Buy CML Health Care Income Fund up to USD13 if you haven’t already.

Consumers Waterheater Income Fund (TSX: CWI-U, OTC: CSUWF) had another utility-like quarter, with revenue rising 9.4 percent on a rate increase balanced by a slight uptick in lost accounts. Cash flow rose 7.1 percent and again covered the distribution comfortably, for a full-year payout ratio of 92 percent including capital costs.

The submetering operation acquired from Stratcon now appears absorbed, adding nearly a third more contracted units since the deal closed in August. The recent refinancing of CAD330 million of debt will boost interest costs, putting more pressure on operations to grow cash flow. But it also sets any credit worries to rest.

In short, this trust continues to prove its recession-resistant qualities and looks absurdly cheap at a yield of more than 18 percent. Consumers Waterheater Income Fund is still a buy up to USD10 for those who don’t already own it.

Great Lakes Hydro Income Fund (TSX: GLH-U, OTC: GLHIF) posted the strongest earnings in its history in 2008, as power generation increased 22 percent on strong water flows and system expansion. The full year payout ratio came in at just 60 percent, while the fourth quarter showed up at 80 percent, versus a cash shortfall last year in what’s generally a seasonally weak quarter.

The trust invested CAD16.8 million in growth capital and CAD3.5 million in major maintenance in 2008. In a dramatic expression of its underlying strength in a weak economy, it looks to expand that to CAD17.3 million and CAD4.5 million, respectively, in 2009. That’s a major plus for management’s stated plan of maintaining its current distribution rate in 2011 and beyond, after it comes under taxation. Buy Great Lakes Hydro Income Fund up to USD15 if you haven’t yet.

Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF) delivered record results at all of its business segments in 2008, as its strategy of acquiring and building out fee-based energy assets continues to pay off. The trust, which raised distributions twice in 2008 for a total of 20 percent, still posted a very low 69.8 percent payout ratio. Gathering and processing operations profits rose 25 percent, natural gas liquids infrastructure operations saw a 7 percent income gain and marketing more than doubled its return.

The company also invested CAD230 million in new projects, which will generate substantial cash flows in 2009. Management was able to substantially mitigate the wild volatility in the natural gas liquids business with systematic hedging of pricing exposure, and will likely be challenged to do so again this year. But Gathering and NGL infrastructure are purely fee-based businesses, with no commodity price exposure. There is some risk of throughput reduction as energy producers contract operations. Happily, the trust operates in areas that have been faster growing for several years and has opportunities in others, such as the Montney shale region.

It all adds up to a very stable and growing group of assets, backed by a strong balance sheet and conservative management. Paying a hefty yield of more than 11 percent, Keyera Facilities Income Fund is a buy up to USD20.

Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF) shares have been beaten down to just 62 percent of book value, largely on speculation its now 22 percent plus-yield will be cut. That’s a supposition that continues to be radically at odds with the trust’s numbers.

Fourth quarter power plant performance was roughly on par with last year, as a better showing at wind and hydro facilities offset the impact of an outage at a biomass plant. Meanwhile, the LeisureWorld investment continued to pay solid cash flow. The result was a drop in Macquarie’s fourth quarter payout ratio to 89 percent, bringing the full year level down to management’s target of 100 percent.

Looking ahead, management maintains its “top priority” is to enhance the performance of its asset base, but states it intends to maintain its current distribution for 2009. After that, investors can likely expect the trust to convert to a “high dividend-paying corporation.” That may bring a cut in the distribution, though that’s far from certain and is clearly more than priced in.

Meanwhile, the trust continues to stand up well to recession pressures. Macquarie Power & Infrastructure Income Fund is a buy up to USD8 for those who don’t already own it.

Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF) has again turned in strong results, thanks to the continued successful expansion of its fee-based energy assets. The addition of the Horizon Pipeline system in the oil sands starting July 1, 2008 was one big reason. As is the case with Pembina’s energy transport system for the Syncrude oil sands venture, Horizon makes money on a fixed rate of return basis, eliminating exposure to energy prices and even throughput fluctuations.

The same will be true of the trust’s top priority capital investment for 2009, the Nipisi and Mitsue pipelines, which will consume CAD165 million of a planned CAD260 million in planned growth capital expenditures.

Regarding 2011, Pembina stated for the first time this month that it plans to convert to a dividend-paying corporation sometime in 2010. It also affirmed, however, that it will be able to continue paying the current distribution rate for at least five years afterward (through 2015). That’s a strong affirmation of Pembina’s long-term strengths, as well as its ability to continue weathering the ongoing recession. Buy Pembina Pipeline Income Fund up to USD18.

RioCan REIT’s (TSX: REI-U, OTC: RIOCF) asset base of retail shopping centers showed little signs of fraying in the face of Canada’s economic slowdown. Funds from operations slipped in the fourth quarter, but the payout ratio remained manageable at 88 percent. Moreover, management continued to execute its strategy of buying good properties at depressed prices.

Portfolio occupancy was a very strong 96.9 percent, and the REIT was able to renew leases at an average increase of 11.7 percent over prior levels. RioCan also retained more than 92 percent of expiring leases. These strong statistics are part and parcel of management’s continuing strategy to diversify its customer base and to focus only on the most creditworthy renters. That will serve it well even if Canada’s economy weakens further, as for one thing it will have more opportunity to buy properties cheaply.

Yielding more than 11 percent, this is a high-quality REIT that’s actually selling more cheaply than its troubled US rivals. Buy RioCan REIT up to USD15 if you haven’t already.

Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF) turned in another strong quarter. Growth in distributable cash per share rose 9.1 percent, actually accelerating from the full year rate of 8.3 percent, as the payout ratio sank to 81 percent.

Basically it was the same story we’ve seen quarter after quarter from Yellow. The trust successfully boosted profit margins at its legacy print directory business with cost cutting and by introducing new services and products. Meanwhile, it continued to rapidly grow its Internet directory business, posting a 43.5 percent increase in sales excluding acquisitions. That exceeded management’s already aggressive target of 30 percent and affirmed, again, that the trust has tapped into a recession-resistant trend.

Yellow’s results did trigger a short-term rally in its shares, which had been consistently battered in the weeks before on speculation that it was–in the words of one popular journalist–facing a “reckoning.” That’s what’s been happening to US directory companies. But as these numbers show once again beyond the shadow of a doubt, Yellow has little in common with the likes of Idearc (OTC: IDAR).

Sooner or later, the investing public will take notice and the shares will recover. In the meantime, Yellow Pages Income Fund is selling at 47 percent of book value and a yield of 23 percent-plus. Buy it up to USD8 if you haven’t already.

Aggressive Holdings: Staying Alive

In contrast to the Conservative Holdings, the Aggressive Holdings couldn’t help but be hurt by the extreme plunge in commodity prices. Cash flows have dropped across the board, and all but Ag Growth Income Fund (TSX: AFN-U, OTC: AGGRF), Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF) and Vermilion Energy Trust (TSX: VET-U, OTC: VETMF) have now cut distributions at least once during the cycle.

At this point, however, dividend security isn’t the appropriate bar for these trusts and high-yielding corporations. Rather, the more important question is how well they’re set to weather a potentially very tough 2009, and whether they’re capable of absorbing even deeper drops in energy prices.

Energy trusts are basically releasing two sets of documents now. The earnings report updates performance of operations, along with credit exposure. Meanwhile, the reserves report highlights these trusts’ most important asset, and how well management has maintained it. Both are critical to determining trusts’ sustainability.

When this issue went to press, we were still missing several trusts’ numbers. All five of my core producer trusts have reported, however, as have three other holdings. And, happily, all came in with results that confirmed their ability to survive the downturn and thrive in the ultimate recovery. Note Enerplus Resources (TSX: ERF-U, NYSE: ERF) is discussed in High Yield of the Month.

ARC Energy Trust (TSX: AET-U, OTC: AETUF) set the stage for fourth quarter disappointment with four distribution cuts since August. Then it released earnings and reserve numbers that quite frankly blew the doors off expectations.

Riding the success of its Montney shale play, the trust boosted proven reserves (90 percent chance or better of being developed) 5 percent and probable reserves by 60 percent (60 percent or better chance of being developed). Along the way, it slashed Finding, Development and Acquisition costs (FD&A) for proven reserves by 40 percent and extended proven reserve life to 10.4 years.

The new distribution payout ratio is 38 percent based on fourth quarter results, which in turn are based on energy prices roughly 15 percent above current levels. That builds in room for some further downside in energy prices and should allow cash flow to cover the trust’s capital costs as well, much of which will go to Montney. Of course, a further precipitous drop in energy prices would tighten up cash further. But with costs and debt under control and likely to fall further, ARC looks fully ready to weather even a drop in oil under USD20 a barrel, just as it did when it was founded in the late 1990s.

All energy trusts have downside risk in the current environment, despite their big drops already. But ARC is well positioned to weather further sector storms and to be a big winner when prices revive. ARC Energy Trust is an ideal energy bet for conservative investors up to USD15.

Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF) reported fourth quarter numbers and 2009 guidance in line with what it had indicated a month earlier. As it did in January (and as I reported in the February 2009 High Yield of the Month), management affirmed its intention to maintain its distribution at the current annual rate of CAD1.20 per share, despite pressures on the global sulphuric acid market.

The trust’s key strengths remain the location of its facilities near niche markets it dominates, low costs and a conservative balance sheet, all the results of a strategy put into place several years ago. That solid fourth quarter results were achieved despite the outage of a major facility is further testament to the strength of its asset base.

In its quarterly conference call, management again asserted it “can’t conceive of circumstances” that would result in “earning less money than necessary to support a CAD1.20 per share distribution rate.” It also affirmed a “higher level of capital expenditure” in 2009. That’s a further indication of the trust’s financial strength and a hopeful sign for future earnings, particularly once the global economy returns to sounder footing.

As is the case with any commodity-based business, there’s only so much risk that can be factored out. That’s why Chemtrade is in the Aggressive Holdings despite its great strengths. Now yielding 25 percent-plus, Chemtrade Logistics Income Fund is a buy up to USD10 for anyone who doesn’t already own it.

Daylight Resources Trust (TSX: DAY-U, OTC: DAYYF) came in with bullish reserve results, replacing 175 percent of 2008 production and expanding projected 2009 output to 22,000 to 23,000 barrels of oil equivalent (boe) a day. Proved RLI (reserve life index) rose to 6.1 years, and the trust was able to hold down capital spending as well with its lower-risk strategy of developing in areas where techniques and reserves have been already established by deeper pocketed players.

Bank debt was cut 14.5 percent from year-ago levels, even as the trust has been able to expand available credit facilities at a reasonable cost. Net debt is a modest 1 times annualized fourth quarter cash flow. That figure is likely to rise in 2009, as realized selling prices for oil and gas pull back from 2008 levels. The impact, however, is likely to be far less for Daylight than for many producer trusts. For one thing, it’s hedged nearly half its 2009 output and realized selling prices for oil and gas were relatively modest. That more than anything else explains why Daylight’s distribution cut in January was relatively moderate despite the catastrophic decline in natural gas prices (63 percent of output).

This is essentially a bet on natural gas, and there may well be more dividend cuts ahead. But there are few, if any, better leveraged ways to play a comeback. Daylight Resources Trust remains a buy up to USD11.

Penn West Energy Trust (TSX: PWT-U, NYSE: PWE) came into fourth quarter earnings season burdened by investor concerns about its debt position, as well as reserves and profitability. Happily, while it does continue to suffer from falling energy prices, it had solid answers on the sustainability front.

Robust fourth quarter earnings and cash flows were no great surprise, due to solid production levels and management’s policy of systematically hedging output. Many high-priced hedges extend well into 2009, which will further safeguard cash flow.

The capital spending budget for the coming year is 45 percent less than for 2008, which will crimp output. The good news is the past couple years’ spending on major acquisitions have put the pieces in place for strong organic output growth that can be ramped up or down as market conditions dictate. Meanwhile, the trust has been aggressive paying down debt ahead of maturities with the proceeds of sales of non-core assets and share issues.

The latter triggered a considerable amount of selling in the shares earlier this year on investor fears of dilution, and there’s still roughly CAD4 billion of debt on the trust’s books. Not much of that, however, is due before 2011. And at a current unit price of just 43 percent of book value, it’s hard to argue there’s not considerably more potential dilution already built into the share price.

The distribution cut of roughly a third effective in February was less than what many had expected, and there will likely be another if oil slips much below the USD45 a barrel the new level is based on. Management, however, also maintains it would be able to maintain capital spending and a lower dividend even at USD35 oil.

In short, Penn West isn’t risk free, but it does have far fewer sustainability challenges than the share price and nearly 30 percent yield would indicate. Penn West Energy Trust is still a buy for patient energy investors up to USD15.

Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF) has released fourth quarter and full year earnings and reserves numbers that once again reflect management’s conservative and sustainability-focused strategy. The trust issued very little capital and cut interest expense by 15 percent from 2007 levels, despite a roughly 8 percent increase in total debt. Proved reserves were increased 16.9 percent, while net present value for proved reserves rose 10 percent per share.

As noted in Dividend Watch List, the trust clipped its distribution 20 percent to preserve capital and reduce the need for new debt, and capital spending is likely to remain subdued in 2009. That’s a luxury Peyto can certainly afford, however, with a proved reserve RLI of 17 years and easily the lowest operating costs in the industry. Meanwhile, the impact will be somewhat mitigated by the trust’s ability to take advantage of the change in royalty scheme for Alberta.

Management has also been successful hedging its output, moderating the impact on earnings of fluctuations in natural gas prices. That’s a major factor in holding down the payout ratio, despite conservative production levels. And the nature of the trust’s properties is such it can ramp up production dramatically later in 2009 if prices should recover.

Even the relatively high debt level of 1.8 times annualized cash flow isn’t really a cause for concern, given the trust’s large cushion with regard to its lender covenants, the nature of its low-cost assets and the general strength of its lender banks. The yield of 22 percent is priced for great risk this trust just doesn’t have. Peyto Energy Trust is a buy up to USD10.

Trinidad Drilling (TSX: TDG, OTC: TDGCF) trimmed its distribution by two-thirds, as noted in Dividend Watch List. The converted corporation, however, still pays a distribution of 9 percent, even as it’s taken its payout ratio down to just 8 percent. Those facts, and a price of just 24 percent of book value, argue one of two things: Either Trinidad is going bankrupt soon, or it’s an extreme bargain.

Energy services remains a challenged industry, and conditions could get even worse if oil and gas prices fall further. More than half of Trinidad’s revenue, however, is locked into long-term contracts that require payment whether assets (drilling and service rigs) are used or not. Moreover, the dividend cut should allow self-financing of further growth, there are no significant debt maturities due until April 2011, and management plans to halve the amount outstanding under its bank credit line to CAD60 million by the end of the year.

All in all that adds up to an exceptionally conservative place to operate from in a rotten near-term environment–and a great position to eventually cash in on a recovery in energy prices. Again, there can be no guarantees in this industry. But at Trinidad’s current price, there’s at least 10-to-1 upside. That’s a worthwhile bet to at least hold onto your shares. Trinidad Drilling is a buy for those who don’t already own it up to USD3.

Vermilion Energy Trust (TSX: VET-U, OTC: VETMF) has yet to cut its distribution during this down cycle, and its fourth quarter results clearly demonstrated why. Global production rose 5 percent, as the trust continued to enjoy opportunity on three continents: Australia, Europe (France, Netherlands) and North America. Net debt was cut in half and will essentially be wiped out and then some by the pending sale of the trust’s 42.4 percent stake in developer Verenex (TSX: VNX, OTC: VRNXF) to China’s CNPC International.

Global diversification has also allowed the trust to maintain a higher selling price for its oil and especially natural gas, the price of which remains far higher in Europe and Asia than in the US and Canada. The fourth quarter payout ratio came in at just 33 percent, leaving plenty of cash to fund capital spending without resorting to capital markets. Looking ahead, Vermilion’s capital spending plans for 2009 and its current distribution level are now based on baseline selling prices of USD40 for oil and CAD5 (USD3.85) per thousand cubic feet of gas. Those are actually below current market levels, building in a further layer of safety for the trust. And with no debt on its balance sheet after the Verenex sale, Vermilion will also be in prime position to make significant wealth-building acquisitions.

Not even Vermilion is immune to energy price swings. But selling at a yield of nearly 10 percent, there’s no safer way to play a rebound, or better way for conservative income investors to ride out this downturn. Buy Vermilion Energy Trust up to USD25.

Waiting Game

The first quarter of 2009 only has a few more weeks to run. Unfortunately, filing requirements mean we still don’t have fourth results for a number of Canadian Edge Portfolio picks. That’s frustrating, but note that first quarter 2009 results will be released in a far more timely fashion.

Meanwhile, we will be reporting and reviewing the remaining numbers in Flash Alerts later this month.

Conservative Portfolio

• Artis REIT (TSX: AX-U, OTC: ARESF) March 18, 2009
• Atlantic Power Corp (TSX: ATP-U, OTC: ATPWF) March 30, 2009
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF) March 16, 2009
• Innergex Power Income Fund (TSX: IEF-U, OTC: INRGF) March 11, 2009
• TransForce (TSX: TFI, OTC: TFIFF) Mar. 12, 2009

Aggressive Portfolio

• Advantage Energy Income Fund (TSX: AVN-U, NYSE: AAV) March 6, 2009 (Estimated)
• Ag Growth Income Fund (TSX: AFN-U, OTC: AGGRF) March 17, 2009
• Newalta Income Fund (TSX: NAL-U, OTC: NALUF) March 6, 2009
• Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF) Mar. 11, 2009 (Estimated)