Where there’s smoke, there’s fire: That’s a hard lesson all too many investors learned during the 2008 market-wide meltdown. And it’s why so many are on edge about the possibility of another debacle here in early 2010.

Our Canadian Edge Portfolio favorites all proved their mettle during the 2008 crunch, arguably North America’s worst economic crisis in 80 years. Even our resource producers–which saw their cash flows hit hard by crashing commodity prices–managed to keep their long-term futures intact by deft financial management.

Our Conservative Holdings fared far better, thanks to having little or no exposure to commodity prices. In fact, of the current holdings, only Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF) was forced by the recession to trim its distribution. That’s the same underlying business strength that’s enabled all of those announcing conversions to corporations thus far to beat expectations on future dividends.

In fact, 13 of the 20 Portfolio trusts to announce conversions so far did so without cutting dividends a penny. All but Trinidad Drilling (TSX: TDG, OTC: TDGCF)–a victim of the sharp slide in energy prices since its January 2008 conversion announcement–are on much higher ground than they were before making their moves. And even Trinidad has vastly outperformed its rivals in the battered energy services sector.

What all of our companies have in common–whether they be trusts, dividend-paying corporations or something else–is underlying business strength. We saw that consistently throughout the crisis with solid operating numbers and balance sheets, despite the fact that much of the wider world was collapsing all around them. And we saw it again in fourth-quarter and full year 2009 numbers that were released over the past three months.

Our picks took their hits like everything else during the 2008 debacle. In fact, the damage was augmented by a sharp slide in the Canadian dollar’s exchange value versus the US dollar, which fell from a November 2007 high of roughly USD1.07 to a March 2009 low of just 77.6 US cents, a massive decline of some 27.5 percent.

Would fearful investors abandon the Canadian dollar and Canadian investments again to that degree should we see another meltdown? There are certainly valid arguments on both sides of that question.

On the plus side, no one expected the kind of strength the Canadian banking system showed in weathering the crisis, which was an extremely stark contrast to what happened to disaster that nearly overcame the highly leveraged US financial system. Most economists and analysts also vastly underestimated Canada’s growing connection to Asian markets, which softened the blow dramatically from collapsing US demand, particularly for natural resources.

Historically, when the US economy has caught a cold, Canada has come down with flu. And given the dire straits this country was in, most seemed to expect an outbreak of pneumonia north of the border. What we saw instead was an emergent Northern Tiger, which has continued to outshine the US during the recovery–and without relying heavily on government spending and banking-system leverage.

They won’t underestimate Canada again, and that should give investors a lot of comfort should the US experience a relapse, or should the investment markets take another tumble. So should the fact that our picks, despite taking hits in the equity market, weathered the crisis as businesses and never lost access to credit at economic rates–as much a testament to their own solid assets and sound financial management as the overall health of Canada’s banking system.

On the other hand, if anything is predictable about crowd behavior in a declining market, it’s that rationality is almost always the first casualty. Continuing strong business results at our Portfolio picks is a sure sign that they’ll come back from any debacle, just as they did from what happened in late 2008. But it’s no guarantee there won’t be selling, and even gut-wrenching declines for individual holdings.

So far this year the broad-based S&P/Toronto Stock Exchange Income Trust Index is up 13.5 percent in US dollar terms. Yet the higher trusts and other high-yielding Canadian equities have risen, the greater investors’ fear of an eventual day of reckoning has grown. That’s manifest in the greater volatility in the prices of individual securities, including those backed by extremely sound businesses.

Atlantic’s All Right

Front and center in this trend is Atlantic Power Corp (TSX: ATP, OTC: ATLIF), the owner of power plants and power lines. Atlantic’s been one of our biggest winners since it bottomed at a price of just USD4.61 per income participating security in November 2008–and it’s now the target of some wild volatility in its share price.

As noted countless times in CE, the company’s ballast is its very generous distribution, backed by a uniquely stable business. Cash flows come almost entirely from long-term power purchase agreements (PPAs), primarily with regulated US electric utilities.

Not once in the history of the power industry has there even been a default by a utility on a power purchase contract. That includes the handful of bankruptcies that occurred during the 2001-02 power industry crisis. And today, with the electric utility industry now more than seven years into an historic deleveraging and risk-reduction push, odds of a default on one of Atlantic’s PPAs are more remote than ever.

PPA returns are further safeguarded by hedging exposure to commodity-price and currency volatility. Hedges are necessary because the company earns revenue in US dollars and pays a distribution in Canadian funds. Management, for example, has taken advantage of low gas prices of recent months to lock in some 80 percent of its fleet-wide needs through 2013 at rates it deems very economic. And cash flows are even protected against outages at power plants, as contracts are based on capacity rather than raw output, and there’s room built into them for down time.

The remainder of cash flow is from the Path 15 power line in California, the critical link between the state’s southern and northern grid. Returns here are even more secure, as rates are set by the Federal Energy Regulatory Commission on a three-year basis based on equity in the project. The company is in the midst of its next filing, slated for the end of 2010, a case that by all accounts is proceeding in line with expectations.

One of the key benefits of having so much visibility about future cash flows is that management is able to do long-term forecasting other companies can scarcely dream of. And with the date of its New York Stock Exchange listing fast approaching–and mindful of investors’ focus on distributions–CEO Barry Welch endeavored to provide just that with the company’s long-awaited fourth-quarter earnings release and conference call on March 30.

The result was basically the painting by management of a “failure scenario” for its distribution, in which none of its ongoing growth initiatives would pay off and assuming conservative estimates for other unknowns–such as the inking of a new PPA in Florida is 2013. Under this projection, cash flows will drop in 2010 and remain flat in 2011, resulting in an all-in payout ratio of around 100 percent of distributable cash flow. Cash flow in 2012 will then turn higher due to locked-in factors such as the complete pay down of debt at one major plant.

Summing up, even under this failure scenario, management now expects it would be able to maintain its current distribution of 9.12 cents Canadian per month “into 2015.” By that time, Atlantic would have to build or buy more power assets in order to hold that rate of dividend.

Happily, given management’s demonstrated skills in expanding its business since Atlantic’s inception in 2004, it’s a relatively easy assumption that it will be successful. One possibility is the potential startup of a biomass facility in the company’s venture with Rollcast Enegy. But it’s hardly the only option, as management has a full range of potential acquisitions in various stages of negotiation.

Most important, with five years of cash flow stable enough to guarantee the current distribution, there’s no rush to get anything done. Management can afford to step back from any deal that doesn’t meet its exacting criteria, or which becomes uneconomic due to competing bidders.

Again, any company can get tripped up, particularly a relatively small one that depends so heavily on its management team as Atlantic does. But this is a well-balanced portfolio that’s protected against at least most conceivable scenarios, including potential carbon regulation. That’s just what you’d expect from executives with a background in the insurance business. And it’s all set up for one purpose: to pay one of the most generous distribution streams of any company in any industry.

So why the share price volatility? Two things are in play here. One is simply that investors on both sides of the border have been locking in the hefty gains they’ve received over the past year and a half. Trading over the past several weeks, for example, appears very similar to what we saw in early December 2009, following the release of what were solid third-quarter earnings and the company’s conversion from an income participating security to an ordinary corporation without cutting its distribution.

Selling has been a little more intense this time, in parts because of Atlantic’s higher price and because of the greater level of investor fear about the overall market. And it may have intensified due to the growing use of stop-losses and trailing stops, which has opened up some investors to the risk of vicious whipsaws. This basically occurs when too many stops have been set too close to the current price of a stock, triggering a slew of sell orders at the same time and magnifying what would otherwise have been a relatively minor drop in the share price.

There’s also the possibility that some have taken management’s “failure scenario” to mean that Atlantic is abandoning any attempt to grow its business–a conclusion that couldn’t be further from the truth. And some are uneasy about the fact that the payout ratio will be around 100 percent of distributable cash flow the next couple years, again ruling out distribution growth barring an acquisition.

Here’s how I see it. First, Atlantic is a high-dividend stock. That’s what we’re buying here, and the assets, cash flows and management plans are all aligned to protect and grow that dividend stream. In short, the positive story of the underlying business hasn’t wavered.

Second, my buy target for Atlantic has consistently been USD12. Anyone who’s stuck to that has suffered no loss from the recent volatility. And it’s quite possible the technical tide is about to turn for the upside, as the company’s NYSE listing nears and management steps up telling its story to institutions in the US as well as Canada. The bottom line is this is still a very sound story worth sticking to.

In fact, Atlantic Power Corp is still a buy up to USD12 for those who don’t already own a position.

Around the Horn

Atlantic has been far and away the most queried-about stock by CE readers lately. It’s far from the only company, however, to suffer jagged volatility in recent weeks.

As with Atlantic, the key is the health of the underlying business. Even in the dark days of late 2008, as their shares were getting pummeled, our favored trusts and high-yielding Canadian corporations were, by and large, holding their own as strong businesses. More than anything else, that ensured the recovery they’ve enjoyed since March 2009.

The good news is fourth-quarter numbers, up and down the line, again confirmed our holdings are strong businesses. That was true of all those who reported in time to be reviewed in the March Portfolio Update. And it’s true of the remainder that turned out their numbers last month.

Of those, Atlantic is reviewed above, while Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF) and Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF) are highlighted in High Yield of the Month. I review the rest of the results below, in alphabetical order.

Ag Growth International’s (TSX: AFN, OTC: AGGZF) fourth-quarter earnings per share surged 59 percent on a more than doubling of cash flow, as the company actually managed to best last year’s strong results. Full year sales soared 19 percent, when earnings per share rose 110 percent.

Best of all, management sees better things ahead for 2010. Record and near-record crops for corn and soybeans have created unprecedented demand for the company’s grain-handling equipment.

And with, in management’s words, “mountains of grain to be moved and stored,” demand will be robust going forward as well. Inventory levels are low, backlogs are strong, and the company has the ability to raise output levels if the market demands it.

Management plans a further CAD15 million in capital spending to increase storage-bin capacity, with a broader aim of capitalizing on opportunities emerging outside of its core North American market. The goal is to build “a foundation for substantial growth in 2011 and beyond,” which would almost surely send earnings, distributions and the share price markedly higher.

As for this year, Ag Growth will also continue to be supported by the US government mandates to ramp up use of ethanol in gasoline, which supports heavy corn demand and prices, hence big corn crops and demand for handling equipment. The payout ratio of just 50 percent based on fourth-quarter distributable cash flow is not only sharply lower than a year ago. It also supports ample free cash flow to use to make further investments. Even the rise in the Canadian dollar–which reduces the value of US dollar revenue–isn’t a major risk, given the company’s ability to spread costs and hedge additional exposure.

The only real drawback is the stock’s current price, which exceeds my buy target of USD35. My full expectation is that this one is going a lot higher. But now back to its early 2008 highs, I prefer to wait for my buy target, which investors have had plenty of opportunity to buy below as recently as last month.

Artis REIT (TSX: AX-U, OTC: ARESF) couldn’t completely escape the negative impact of Alberta’s temporary glut of real estate, particularly of the office variety. That was to be expected considering half of revenue comes from that energy-focused province.

What was surprising, however, was the fact that the real estate investment trust again posted its same property net operating income by 5.2 percent, thanks to a combination of cost controls, steady occupancy and still-rising rents. The result was another quarter of solid dividend coverage, with a payout ratio of 84 percent based on recurring distributable cash flow.

Artis’ management also continued its recent progress bringing down debt, taking its mortgage debt-to-gross book value ratio down to 47.4 percent as of Dec. 31, 2009. That’s down from 51.6 percent at the end of 2008 and was achieved despite a bad year for property values and the REIT’s restructuring efforts, which included asset sales in Alberta and purchases outside the province.

The company continues to have no problems raising capital at economic rates, closing both debt and equity offerings in recent months. Approximately 40 percent of debt maturing in 2011–a year in which 11.6 percent of the REIT’s mortgage debt will come due–has already been repaid or refinanced, and the rest is well on its way to getting rolled over.

Meanwhile, 16 properties acquired in 2009 are starting to generate cash flow, including a Manitoba-based portfolio of light industrial properties. Tenant retention for the full year came in at 70 percent, with an average rental rate increase of 16 percent for renewed leases. And management estimates that average market rental rates are still 11.1 percent and 5.3 percent higher, respectively, above rental rates on leases that will expire in 2010 and 2011. That’s a positive sign for rent growth in those years, when 15.9 percent and 14.4 percent of leasable area, respectively, comes up for renewal.

Looking ahead, acquisitions will continue to play a major role in determining profitability, with profits and cash flows benefitting more the faster remaining cash is put to work. A rebound in Canada’s energy patch properties is also critical, though Artis is far better protected from setbacks than rivals.

The REIT’s units have come back a long way from the depths of early 2009, when some feared mistakenly that it would be taken down by the recession. Nonetheless, the units still yield well north of 9 percent and sell for just 1.25 times book value. That’s enough to keep Artis REIT an attractive buy for conservative income up to USD12, with the promise of a return to the highs in the upper teens last seen in mid-2008.

IBI Income Fund (TSX: IBG-U, OTC: IBIBF) clearly spooked some investors when it announced earnings in mid-March.

The global designer of major infrastructure projects again produced robust top-line growth, with revenue surging 15.1 percent for the full year, even including the impact of a rising Canadian dollar on US dollar revenue. Acquisitions provided the lion’s share of the increase, as the company continued to expand its range of contracts and expertise, particularly outside North America.

On the bottom line, however, distributable cash flow slipped 12 percent for the full year, punctuated by a whopping 53.8 percent drop in the fourth quarter. That pushed the payout ratio up to 139 percent for the quarter and 90.2 percent for the full year, versus 71 percent for full-year 2008.

The hidden good news on these numbers is the slide is almost entirely due to foreign currency exposure, particularly the US dollar. Factoring that out–including asset writedowns needed for accounting purposes–the full-year payout ratio based on distributable cash flow was actually much lower in 2009, coming at 81.9 percent versus 100.8 percent in 2008.

With a likely conversion to a corporate structure coming–along with some higher taxes– income investors don’t want to see high payout ratio numbers. And many have effectively voted with their feet in response to the uncertainty, with the result of massive volatility in IBI units.

Again, I don’t presume to know what IBI management has in store for its distribution, which up to now it’s had little trouble covering. But there’s a serious question about what happens to cash flow and hence the payout ratio in 2010 based on the current dividend rate, and how that will affect the future payout. And the answer is likely to make a real difference for what management winds up doing.

First, let’s look at the basic business. Like Bird Construction, IBI’s business depends on winning contracts for major projects. And it’s been hurt by the drop in activity in the private sector in North America. Also like Bird, however, IBI has been tacking successfully toward replacing lost business with public sector contracts. The public sector as of the end of the fourth quarter accounted for more than 65 percent of total backlog versus 40 percent a year ago and continues to increase in building facility areas for health care, education and transportation.

IBI achieved the highest fee volume ever in 2009, and the four major acquisitions (three in the US, one in Canada) have been positive contributors. With public sector work now twice private sector as a percentage of revenue, public growth should have even more of an impact on revenue than last year, when it basically balanced out the drop in private sector business.

Throughout the recession/credit crunch, IBI maintained easy access to capital, which is the primary reason it was able to complete so many revenue-building acquisitions. Cash flow fell in 2009, while revenue rose, in part because of the debt taken on to complete these deals. Management, however, has hardly been asleep at the switch, completing several transactions to reduce costs and refinancing risk, including successfully issuing equity.

Profits at the growing US and international operations are not subject to Canadian taxes, and thereby provide a means to shelter cash flow for dividends from taxes. On the other hand, disappointing fourth-quarter and full-year 2009 results were in large part the result of cash flow from these operations getting squeezed by a combination of recession pressures and currency swings.

Management acknowledged these pressures in its earnings release and conference call, noting such problem areas as Florida residential development, industrial buildings and urban planning work in California. Future results, however, should be boosted by success winning public sector contracts, augmented by the addition of firms in New York, Washington and Los Angeles that bring the US staff to 650. And the company remains committed to further growth with acquisitions, even if they “dampen distributable cash as a percentage of revenue in the short term.”

As for currency swings, management now claims to have “favorably resolved (this) for the future by an internal hedging arrangement through which borrowings of IBI Group in US funds approximately (equal) accounts receivable.” This is a frequently used cross-border hedging technique by firms with low risk that should limit future ups and downs in overall earnings based on currency swings. And it could prove important to profitability should the Canadian dollar continue to appreciate against the greenback.

Investors are wise to be skeptical of management explanations for weak numbers. And I’ll be scrutinizing what IBI comes out with in its first-quarter results, particularly as regards this so-called internal currency hedge.

Given the company’s solid history and a 10 percent-plus yield that’s pricing in a conversion-based distribution cut later this year, however, I’m keeping my buy recommendation on IBI Income Fund up to USD17, with the caveat that those who are already in should not overload.

Innergex Renewable Energy (TSX: INE, OTC: INGXF) is the surviving company from the merger of the former Innergex Power Income Fund and its operating company. Unitholders of the former trust should by now have received 1.46 shares of INE for every unit they used to hold of IEF-U. There are no tax consequences of the deal on either side of the border, and dividends should henceforth be exempt from the 15 percent withholding tax for Innergex shares held in US IRA accounts.

Per the terms of the deal, dividends to unitholders of the former trust have been reduced by 15 percent. That’s the result of the following calculation: a new annual rate of CAD0.58 times the exchange ratio of 1.46 equals an annualized rate per former trust share of approximately CAD0.85, or 15 percent below the old rate of CAD1 per unit.

Encouragingly, the total distributions received by US IRA investors should stay roughly the same as before the merger. That’s because the amount of the reduction is approximately equal to the dropping of the withholding tax.

The real questions, or course, are where Innergex is going and whether the gains recorded since the merger was announced will be extended. The answers remain to be seen. But if earnings of the former trust for fourth-quarter and full year 2009 are any guide, management will deliver on the strategy it laid out when this deal was announced February 1.

To begin with, annual revenue of the pre-merger Innergex Renewable Energy rose more than fourfold, thanks to the first full-year contribution of two major new hydroelectric power plants. Cash flow swung sharply positive. Meanwhile, the former income fund took its payout ratio down to 98 percent versus 102 percent a year earlier, as it continued to boost cash flow from its wind and hydro portfolio.

The new distribution rate will be on the high end of distributable cash flow. That, however, is entirely within management’s comfort zone as it attempts to execute on a number of major capital projects that will spur future earnings.

The upshot is a company with a safe yield that’s still high enough to be generous and low enough to enable Innergex to grow, ultimately spurring a higher distribution. And the company is ideally placed for when carbon regulation again raises its head, both as a stand-alone vehicle inking a growing number of PPAs with government entities and as a potential takeover target.

My buy target for the new Innergex Renewable Energy is USD10, a level where it would still trade for scarcely more than the book value of its increasingly valuable properties.

Northern Property REIT (TSX: NPR, OTC: NPRUF), like Artis REIT, has seen its revenue and cash flow nicked by the recession, particularly by the property glut in Alberta apartments.

But even though revenue from properties owned for more than a year (same store sales) fell 2.9 percent in the fourth quarter, distributable cash flow still covered the payout handily, with a payout ratio of just 73 percent. The full-year payout ratio, meanwhile, was just 68.3 percent, as the REIT’s geographic diversification, conservative financial policies and reliance on government customers again paid off with unmatched stability in trying times.

Looking ahead, the REIT’s properties outside Alberta continue to weather the recession, and the apartment rental operation is, in management’s words, “experiencing improvement across our system.” Residential market conditions were solid in Nunavut and Newfoundland, provinces where many of Northern’s holdings are close to being the only game in town. Meanwhile, the balance sheet remained solid, with average weighted interest rates portfolio wide declining to 4.87 percent from 5.13 percent at the end of 2008.

Next year’s net should get a lift form several areas. First, accelerated capital spending for maintenance work last year is now done, having been successful completed at a time of higher vacancies and therefore without an accompanying loss in rental revenue. Even the battered Fort McMurray market is “beginning to improve,” according to management, and the REIT is taking advantage of what it calls “a modest amount of accretive apartment purchasing activity” in the area as well.

That includes the purchase of 180 apartment units in Alberta and the Northwest Territories last month for CAD13.9 million, which will become more profitable still after a planned modest capital program. Northern will also benefit from not having to have done an equity issue last year when prices are lower.

The only problem with buying Northern now is price, which is now a bit above my current buy target of USD23. Anything below that level, however, is an ideal time to pick up one of the lowest risk REITs in North America, ideal for even the most conservative investors.

Peyto Energy Trust’s (TSX: PEY-U, OTC: PEYUF) CAD65 million equity offering announced this month is the latest evidence that management has successfully steered the primarily oil and gas producer trust through one of the toughest periods in its history.

Moreover, proceeds will be used to pay down debt and fund the company’s capital program, cutting costs and deepening output of the trust’s prolific low-cost reserves, which have a longer life based on proven reserves than Exxon Mobil’s (NYSE: XOM).

As expected, Peyto’s fourth-quarter cash flows were hurt by the steep drop in natural gas prices over the past, a decline that was only partly offset by higher oil prices and cost controls. Nonetheless, the company still brought its payout ratio down out of the critical range to 78 percent for the period, with the promise of further declines ahead.

The main reason to own Peyto is the combination of its unmatched reserve base, management expertise and conservative financial policies. This management successfully built on in 2009, lifting proved reserves by 17 percent to a reserve life index of 21 years. Proved undeveloped reserves, meanwhile, were increased 77 percent and proved plus probable undeveloped reserves exploded upward by 190 percent.

In addition, the cost of new production was cut 48 percent, while operating costs on the whole were cut to CAD2.48 per barrel of oil equivalent produced. Those are by far the lowest operating costs in the industry and are substantially below last year’s CAD2.60 per barrel of oil equivalent. And at the same time, net debt was cut by CAD52.8 million to CAD439.9 million, and will come down further thanks to the equity issue.

Like other natural gas-focused producers, Peyto has hedged its future output on the forward price curve, locking in what are prices that should ensure solid cash flows in 2010. Profits are likely to get a further boost from a lower rate royalty regime in Alberta, which provincial officials hope will encourage further development that the trust is known for.

The most encouraging news out of Peyto with its earnings release was management’s statement regarding its plans to convert the trust to a corporation “on December 31, 2010.” According to the statement, “the new corporate structure will continue to afford Peyto the ability to return profits from the success of the business to shareholders in the form of dividends.”

As for the amount to be paid, that’s certain to depend mainly on what happens to natural gas prices over the next year. Management will be balancing its development needs, fueled by a 50 percent jump in undeveloped land holdings in 2009. According to statements by CEO Darren Gee during the conference call last month, however, the conversion process will be “seamless” to Peyto unitholders, with distributions continuing monthly and the only question what external conditions will allow.

The upshot: Peyto is still one of the lowest-risk, high-distribution ways to play what’s been extremely volatile commodity, natural gas. The company has reserves worth roughly half again more than its unit price, even valued extremely conservatively. And it trades for less than half what it did in early 2006, when natural gas prices peaked in the wake of Hurricanes Katrina and Rita. That speaks to a lot of upside and not much downside. My buy target for those who don’t own Peyto Energy Trust remains USD14.

Provident Energy Trust (TSX: PVE-U, NYSE: PVX) continues its transition from high-cost producer into a conservative, midstream-focused company with moderately priced oil and gas output. Last month, the trust completed the acquisition of the Corunna, Ontario hydrocarbon storage facility from Dow Chemical Canada.

The deal boosts Provident’s scale in midstream assets in the Sarnia area and includes CAD17 million in planned capital spending to upgrade and expand existing rail facilities at the site and to construct a truck loading terminal.

These fee-based midstream energy assets are strategically concentrated in premium natural gas liquids (NGL) markets in eastern Canada. NGLs are in high demand across North America as a much cheaper substitute for oil in everything from petrochemicals to plastics. Provident is well positioned to profit from this growth through these low-risk assets.

Successful growth of midstream operations was the major reason why the company was able to take its payout ratio down to just 62 percent in the fourth quarter of 2009. Gross margin on these operations rose 37 percent for the year and asset addition ensure further growth in 2010 as well.

In contrast, Provident’s upstream (production) operations have been downsized, with overall production falling some 22 percent versus year-earlier levels. Here, too, however, the company has moved to a stronger overall position with the disposition of non-core assets, mostly for cash that enabled midstream expansion and the reduction of bank debt by 48 percent from 2008 levels. Bank debt is now down to just CAD80 million, leaving CAD980 million in available credit on the company’s current line.

Despite a drop of 29 percent in total proved plus probable reserves from 2008, the company’s reserve life have risen to 14.6 years on that basis. Finding and development costs, meanwhile, have come down to just CAD13.01 per barrel of oil equivalent from a prior CAD18.87. That cost control should help leaven out future swings in production operations’ returns, providing more stability for overall cash flow and distributions.

As for what those will be following the trust’s likely conversion to a corporation later this year, management isn’t saying yet. The key, however, is Provident is definitely putting the pieces in place to both growth its business and to pay generous dividends for years to come, with the precise amount still likely to be heavily impacted by the level of energy prices. The settlement of the company’s dispute with Quicksilver Resources (NYSE: KWK) over its former BreitBurn Energy Partners LP (NSDQ: BBEP) unit removes another major cloud of uncertainty that had hung over the units in recent years, and the cost was negligible.

Despite rising more than 90 percent over the past year in US dollar terms, Provident units are off the highs reached earlier this year and more than a third below their trading range of late 2006. The changed nature of the company’s business means revisiting that high will depend on growing its midstream operations successfully as much as on energy prices.

But with a more stable business mix, the ability to pay stable distributions has also grown greatly. This is an increasingly conservative investment with a high yield of 9 percent. Provident Energy Trust is a buy up to USD8.

What to Watch

Thankfully, our next opportunity to gauge the financial health and business strength of Canadian Edge holdings–first-quarter 2010 earnings reporting season–will play out a lot faster than fourth-quarter and full-year reporting did. That’s because there’s considerably less regulation to follow. The numbers as a result are less probing. But coupled with what we saw for full-year 2009, there will be plenty of information to get a great read on what’s to come.

Here are expected reporting dates for Canadian Edge Portfolio companies. Note that most are estimated rather than officially announced dates, so all are subject to change. I’ll be updating any numbers that appear between issues in Flash Alerts and the weekly Maple Leaf Memo, as warranted. Expect a full roundup of what’s been reported in the May and June issues.
Conservative Holdings

• AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF)–April 29
• Artis REIT (TSX: AX-U, OTC: ARESF)–May 13
• Atlantic Power Corp (TSX: ATP, OTC: ATLIF)–May 15
• Bell Aliant Regional Comm (TSX: BA-U, OTC: BLIAF)–May 4
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–May 13
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–May 12
• Canadian Apartment Properties REIT’s (TSX: CAR-U, OTC: CDPYF)–May 12
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–May 7
• Colabor Group (TSX: GCL, OTC: COLFF)–April 29
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–April 27
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)–May 7
• Innergex Power Income Fund (TSX: IEF-U, OTC: INRGF)–May 13
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–May 14
• Keyera Facilities Income Fund’s (TSX: KEY-U, OTC: KEYUF)–May 5
• Macquarie Power & Infrastr Inc Fund (TSX: MPT-U, OTC: MCQPF)–May 12
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–May 12
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)–April 29
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–April 29
• TransForce (TSX: TFI, OTF: TFIFF)–April 23
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–May 6

Aggressive Holdings

• Ag Growth International (TSX: AG-U, OTC: AGGZF)–May 7
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–May 5
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–May 11
• Daylight Resources Trust (TSX: DAY-U, OTC: DAYYF)–May 6
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)–May 7
• Newalta’s (TSX: NAL, OTC: NWLTF)–May 11
• Paramount Energy Trust (TSX: PMT-U, OTC: PMGYF)–May 7
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–May 6
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–May 13
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–May 7
• Trinidad Drilling (TSX: TDG, OTC: TDGCF)–May 6
• Vermilion Energy Trust (TSX: VET-U, OTC: VETMF)–May 7

Following is a list of the trusts in the Portfolio that have yet to announce or implement post-conversion dividend policies. Note that Bird Construction, Paramount and Peyto are no longer on the list, having announced no-cut conversions last month.

The rest of the Portfolio holdings have either converted, don’t have to convert or have yet to convert but have otherwise announced plans for post-conversion dividends. I expect more details from these with first-quarter earnings announcements.

• Altagas Income Trust (TSX: ALA-U, OTC: ATGFF)
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)
• Daylight Energy Trust (TSX: DAY-U, OTC: DAYYF)
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)

As for Portfolio companies that have never once cut dividends, the list remains the same as last month. Bird’s announced no-cut conversion to a corporation ensures it will remain on this extraordinary list for the foreseeable future.

Note that Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF), CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF) and IBI Income Fund (TSX: IBG-U, OTC: IBIBF) have yet to declare post-conversion dividend policies, while AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF) expects to make at least some dividend reduction in 2011 when the new taxes kick in.

• Ag Growth International (TSX: AFN, OTC: AGGZF)
• AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF)
• Artis REIT (TSX: AX-U, OTC: ARESF)
• Atlantic Power Corp (TSX: ATP, OTC: ATPWF)
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)
• Colabor Group (TSX: GCL, OTC: COLFF)
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)