The agile investor, acting on a well-conceived plan after waiting for the opportunity to arise, will pounce when short-term selloffs take high-quality stocks backed by strong businesses down into the bargain bin.

They’ll be equally alert for longer-term mispricing of solid assets, such as what’s taken place since early May 2013 with real estate investment trusts (REIT) and other vehicles perceived to be particularly sensitive to rising interest rates.

Vermilion Energy Inc (TSX: VET, NYSE: VET) has suffered a double-digit decline since it hit an all-time closing high of CAD77.92 on the Toronto Stock Exchange (TSX) on June 20, 2014, while RioCan REIT (TSX: REI-U, OTC: RIOCF) has only partially recovered from the “taper tantrum” that knocked it from CAD29.19 on May 3, 2013, to CAD23.55 by Aug. 30, 2013.

Declining crude oil prices and a shift away from risker assets–both events driven by geopolitical tensions, including events in the Middle East and along the Black Sea–have hurt Vermilion.

The sense that bond investors would rotate back into US Treasuries and that REITs’ expenses would soar when official rates spiked continue to hinder RioCan.

But Vermilion has one of the best production-plus-dividend-growth stories in the North American energy patch. And RioCan’s portfolio, concentrated in Canada’s biggest cities and with growing and beneficial US exposure, is among the best among continental retail property owners. 

The former is the quintessential growth-with-income story, the latter a poster child for income supported by consistent growth. Vermilion, exposed to commodity price fluctuations, as recent history demonstrates, is the more aggressive choice. RioCan, with strong occupancy and built-in rent increases, is more conservative.

Both are suitable for investors of all risk tolerances in the context of a balanced portfolio.

Vermilion posted another positive quarter, with management once again demonstrating it can deliver strong production growth and sustain a dividend.

Management also showed its ability to execute accretive acquisitions in both Canada and abroad, establishing Vermilion as one of the best run exploration and production companies in Canada.

Funds from operations (FFO) for the three months ended June 30, 2014, were CAD216.1 million, or CAD2.05 per share, up from CAD205.4 million, or CAD2.01 per share, for the first quarter and CAD174.6 million, or CAD1.73 per share, for the second quarter of 2013, the increase primarily attributable to improved oil pricing and significantly higher volumes in Canada. The payout ratio for the second quarter was 31.5 percent.

Based on solid production results for the second quarter Vermilion management boosted its full-year production guidance from a prior range of 48,000 to 49,000 boe/d to 48,500 to 49,500 boe/d.

This is the third time management has increased its production guidance since providing an initial forecast for 2014 last November. And it’s not out of the question that management will boost guidance again before year’s end.

The company is also increasing its 2014 capital expenditure budget to CAD650 million, up from CAD635 million.

Vermilion reported average production of 52,089 barrels of oil equivalent per day (boe/d) during the second quarter of 2014, a sequential increase of 12 percent and a year-over-year increase of 22 percent. Oil and natural gas liquids (NGL) accounted for 63 percent of quarterly output.

Growth was driven by a 27 percent increase in Canadian production versus the prior quarter, led by robust performance in both Vermilion’s Mannville condensate-rich natural gas and Cardium light-oil development programs, which achieved production increases of 50 percent and 17 percent, respectively.

Canadian volumes also increased due to approximately two months of contribution from Elkhorn Resources Inc, which closed on Apr. 29.

Vermilion paid approximately CAD427 million for Elkhorn and its high-netback light-oil assets in the Northgate region of southeast Saskatchewan. The acquisition included approximately 57,000 net acres of land (approximately 80 percent undeveloped), seven oil batteries and preferential access to 50 percent or greater capacity at a solution gas facility that’s currently under construction.

European volumes benefitted from a full quarter of contribution from Vermilion’s acquisition of GDF Suez’s (France: GSZ, OTC: GDSZF, ADR: GDFZY) 25 percent interest in four producing natural gas fields and a surrounding exploration license in northwest Germany for USD170 million, which closed in February 2014.

German operations are expected to contribute approximately 2,300 boe/d in 2014.

Vermilion’s international operations insulate it from the price differential for Western Canada Select crude.

In France, the company has drilled two of five planned wells in the Champotran play, following up on a highly successful 2013 drilling campaign. The remaining three wells at Champotran will be drilled before the end of the third quarter.

Tunnel boring is complete at its Corrib project in Ireland, with first gas still set for mid-2015. Peak production is forecast at 9.7 million boe/d. Australian production is tracking to 6,000 to 8,000 barrels per day.

Vermilion, with years of production-per-share growth behind it, has a bright future too.

Vermilion Energy–a core holding for investors searching for growth and dividends–is a buy under USD64.

Despite some headwinds in certain areas of the Canadian retail landscape, RioCan continued to see strong tenant retention and double-digit rent spreads on its Canadian lease renewals.

Despite the rollback of “quantitative easing” in the US the interest rate environment remains attractive, with rates that remain at or near historic lows. Management realized interest savings on refinancings during the quarter and expects further savings in the near future.

The REIT’s urban development pipeline is producing, while in western Canada construction has begun on the Walmart at RioCan’s Sage Hill development in Calgary.

Since quarter’s end RioCan has received approvals on two projects and has submitted an application for approval for a third in Toronto.

Operating FFO for the three months ended June 30 were up 5 percent to CAD127 million. On a per-unit basis operating FFO were up 5 percent year over year to CAD0.42. The payout ratio for the period was 83.9 percent.

RioCan’s concentration of rental revenue in Canada’s six major markets increased to 73 percent as of June 30, 2014, from 71.7 percent as of Dec. 31, 2013. Overall occupancy improved to 96.9 percent at the end of the second quarter from 96.8 percent at the end of the first.

RioCan renewed 1.2 million square feet in its Canadian portfolio during the second quarter at an average rent increase of CAD2.26 per square foot, representing an increase of 13.9 percent.

Same-store growth was 2 percent in Canada and 1.4 percent in the US.

As of June 30 RioCan had ownership interests in 16 properties under development that will, upon completion, comprise approximately 9.7 million square feet (5.1 million at RioCan’s interest), all located in major markets in Canada.

The REIT acquired interests in two income properties in Canada at an aggregate purchase price of approximately CAD23 million at RioCan’s interest at a weighted average capitalization rate of 7 percent.

Management also completed a CAD150 million offering of 3.746 percent debentures with a maturity date of May 30, 2022, demonstrating access to low-cost capital.

A strong balance sheet supports continuing growth via property acquisitions and development on both sides of the Canada-US border. RioCan REIT is a buy under USD27.

For more information on Vermilion Energy, go to How They Rate under Oil and Gas. Click here to go to the company website.

Click here to go to Vermilion’s Yahoo! Finance page for its Toronto Stock Exchange (TSX) symbol and here for its New York Stock Exchange (NYSE) listing. Both links include a wealth of information and data, and both include links to Yahoo! Finance’s very useful “Key Statistics” page.

RioCan REIT is tracked under Real Estate Trusts. Click here to go to the REIT’s website. Click here to go to its Yahoo! Finance page for its TSX listing, and here’s the link to the Yahoo! Finance page for RioCan’s US over-the-counter (OTC) listing. Both links include access to the “Key Statistics” page.

Both companies would be characterized as “mid-caps,” Vermilion with a market capitalization of CAD7.2 billion and RioCan slightly larger at CAD8.1 billion. Both Vermilion and RioCan have ample liquidity on both sides of the border, both in TSX and US-listed symbols.

Vermilion trades on the TSX and the NYSE under the symbol VET. RioCan trades on the TSX under the symbol REI-U and on the US OTC market under the symbol RIOCF.

Vermilion is covered by 22 Bay Street and Wall Street analysts. Twelve analysts rate the stock a “buy,” while nine rate it a “hold.” One analyst rates the stock a “sell.”

The average 12-month price target among the 18 analysts who provide such a figure is USD72.92, with a high of CAD82.61 and a low of CAD60.67, implying a 12-month total return of 21.3 percent from a CAD62.07 closing price on the NYSE on Aug. 7, including an annual dividend rate (converted to US dollar terms at the prevailing exchange rate) of USD2.36 per share.

RioCan is covered by nine analysts, four of whom rate it a “buy,” five of whom rate it a “hold.” There are no “sell” ratings on the REIT.

The average 12-month price target among the seven analysts who provide such a figure is USD27.32, with a high of USD28.36 and a low of USD25.62.

RioCan closed at USD24.24 on Aug. 7 on the US OTC market. Including a current annualized dividend rate of USD1.33 per share, RioCan would post a total return of 18.2 percent based on analysts’ consensus forecast.

As is the case with all stocks in the Canadian Edge coverage universe, you get the same ownership whether you buy in the US or Canada. These stocks are priced in and pay dividends in Canadian dollars. Appreciation in the loonie will raise dividends as well as the value of your shares.

Dividends paid by Vermilion are 100 percent qualified for US income tax purposes. Its dividends are taxed at the now-permanent Bush-era rates of 5 percent to 15 percent for investors’ first USD450,000 a year of income for couples and USD400,000 for single filers. Above that the maximum tax rate is 20 percent.

Canadian investors enjoy favorable tax status for Vermilion. For US investors, dividends paid into IRAs aren’t subject to 15 percent Canadian withholding tax, though they are withheld at a 15 percent rate if held outside of an IRA.

Dividend taxes withheld from US non-IRA accounts can be recovered as a credit by filing a Form 1116 with your US income taxes. The amount of recovery allowed per year depends on your own tax situation.

As for RioCan, the vast majority of Canadian income trusts converted into corporations in 2011, as a result of the Canadian government’s decision to close the loophole that eliminated taxation at the corporate level. With the notable exception of REITs, most other entities that opted to maintain an income trust structure would be classified as Specified Investment Flow-Through entities (SIFT) and would be taxed at the corporate level.

Distributions from a SIFT held in an IRA aren’t subject to the 15 percent withholding tax by the Canadian government. That’s because SIFTs essentially have tax parity with corporations, and therefore their distributions are considered dividends under Canadian tax law.

Distributions from REITs, by contrast, will be withheld at the 15 percent rate when US investors hold them in their IRAs or other tax-advantaged accounts.

Unfortunately, the exemption from Canada’s withholding tax of 15 percent on dividends/distributions from holdings in US investors’ tax-advantaged accounts, such as IRAs and Roth IRAs, only applies to corporations, not REITs.

Furthermore, unlike when Canadian REITs are held within a US investor’s taxable account, the amount withheld by the Canadian government from a REIT in an IRA cannot be recaptured via tax credits from the IRS.