It’s hard to believe nearly four years have elapsed since Canadian Finance Minister Jim Flaherty’s Halloween 2006 announcement of a new tax on income trusts. Now with just three months left to zero hour–Jan. 1, 2011–the big shock is just what a non-event the new tax has become for investors.

Like everyone else outside the Canadian government–and even many inside it–I had no advance knowledge that the Conservative Party would flip-flop on its campaign pledge not to tax trusts. My picks were caught up in the dramatic, two-week slide that followed, just like everything else.

What I did do right was two things. First, from the maiden issue of Canadian Edge, my associate editor David Dittman and I focused on business quality foremost. My reasoning: High yield is a self-evident attraction–but only worth buying into if backed by a strong and growing underlying business.

Adhering to that rationale caused us to exclude from How They Rate coverage more than half the Canadian income trusts issued during the boom. And we warned readers against many of the popular trusts we did cover as well.

That decision left a number of trusts with seemingly attractive yields out of the Canadian Edge Portfolio, including several that were heavily touted by rival advisors. But it also ensured our picks had the staying power to weather a mighty blow, such as Flaherty struck in October 2006 and the credit market meted out in late 2008.

Equally important, Canadian Edge didn’t sell into the panic. That required resisting the well-intentioned advice of some of my closest colleagues at CE’s publisher, as well as the emotion of the market and many readers. But our patience has paid off in spades. In fact, fully half the Portfolio has either surged to new all-time highs since, or is within an eyelash of doing so as actual developments have proven far more favorable than most expected.

Markets always price in future events. In fact, where there’s uncertainty they almost always price in much worse than what actually occurs. That was certainly true for Canadian trusts, and not surprisingly given the bogus information circulated by many that the trust tax would trigger disastrous liquidations and even new levies on individuals.

As we told Canadian Edge readers then, the tax was certainly not a favorable development. But it was entirely at the corporate level. As a tax on corporate profits, it could not by itself trigger liquidation. In fact, the only real impact investors would feel would be on dividends. And the decision to cut or not to cut was entirely at management’s discretion, though tempered by the trust’s ability to pay after absorbing the new taxes.

As a major Canadian accounting firm noted at the time, four years-plus is a long time for companies to adjust to new rules. Equally, it also noted that trusts were far from defenseless, as there were literally as many potential strategies for minimizing the future taxes as there were income trusts trading, which was more than 250 at the time.

Some of the trusts’ strategies have worked out better than others. First to move were the three dozen or so that put themselves up for sale, most fetching premiums to pre-deal prices of 30 to 50 percent that wiped out the post-Halloween losses and then some. These were basically strong businesses generating a lot of cash and were therefore very attractive to the flood of private capital that peaked in mid-2007.

That option faded with the credit pressures that started to tighten in late 2007. And by early 2008 we began to see the first conversions from trusts to corporations. These generally involved fairly steep distribution cuts, followed by selloffs. Immediately afterward, however, share prices began to track the prospects of the companies’ underlying businesses, with the result that the better run began to swiftly recover their losses as value hunters replaced selling income investors.

Then something happened almost no one expected: Two companies, Bonterra Oil & Gas (TSX: BNE, OTC: BNEFF) and Superior Plus Corp (TSX: SPB, OTC: SUUIF), announced they would convert to corporations without cutting dividends. As a result, they both avoided initial selloffs and attracted new buyers as they eliminated their 2011 tax uncertainty.

Trusts that announced conversions and cut distributions during the late 2008-09 debacle did take some massive hits to share prices, including Aggressive Holding Newalta Corp (TSX: NAL, OTC: NWLTF). That was arguably in large part due to the wild selling of the period. Conservative Holding Atlantic Power Corp (TSX: ATP, NYSE: AT), for example, hit an all-time low the same November 2008 date it announced a sizeable dividend increase. And even Newalta has come well back since touching bottom in early 2009.

The lesson that preserving dividends at conversion was the best 2011 strategy, however, was beginning to hit home. The result is almost every trust to convert over the past year has held as much of its distribution as possible, including those who originally seemed set on making big cuts.

For example, Penn West Energy Trust (TSX: PWT-U, NYSE: PWE) CEO William Andrew had long hinted his company would made a deep post-conversion dividend cut to fund aggressive capital spending over the next few years.

As it turned out, however, the oil and gas producer announced in early September that it would preserve 60 percent of its distribution, even while ramping up capital spending to CAD1 billion to CD1.2 billion in 2011.

As I point out in Dividend Watch List, the company was able to have its cake and eat it too, in part thanks to attracting financing from sovereign wealth fund China Investment Corp and Mitsubishi Corp (Tokyo: 8058, OTC: MSBHY) to develop oil sands and shale gas plays, respectively.

Management will elaborate on its strategy at a planned investor day in Calgary on Oct. 20 and during its third-quarter conference call that will be held on or about Nov. 5. In the meantime, Penn West units trade well below even a conservative valuation of its proven reserves. Buy Penn West Energy Trust up to my target of USD22 if you haven’t already.

Conversions and the CE Portfolio

In addition to Penn West, two other Aggressive Holdings have announced their post-conversion dividends since the September issue: Peyto Energy Trust (TSX: PEY-U, PEYUF) and Provident Energy Trust (TSX: PVE-U, NYSE: PVX). Both moves included dividend cuts–50 percent for gas producer Peyto, 25 percent for natural gas liquids (NGL) pure play Provident–and are therefore discussed in Dividend Watch List.

Both Penn West and Peyto have rallied since making their announcements, a clear sign the market was pricing in much worse. As noted in Thursday’s Flash Alert, Provident’s move occurred Wednesday night and there hasn’t been enough time to get a real read on market reaction. But given the negative move in energy prices the day after the announcement (Thursday), it has outperformed so far, a good sign it, too, is benefitting from the end of 2011-related uncertainty.

These announcements leave just three Canadian Edge Portfolio companies yet to set a post-conversion dividend: ARC Energy Trust (TSX: AET-U, OTC: AETUF), IBI Income Fund (TSX: IBG-U, OTC: IBIBF) and Parkland Income Fund (TSX: PKI-U, OTC: PKIUF).

The other 33 of the now 36 strong companies and closed-end funds fall into one of three camps. Eleven have already converted to corporations, as noted by the lack of “.UN” suffix in their Toronto symbols. Six others don’t have to convert, by virtue of being either closed-end mutual funds or real estate investment trusts (REIT). Unlike other Canadian trusts and limited partnerships, REITs are allowed to maintain their tax-exempt status, provided they meet a handful of new structural rules.

Sixteen have announced post-conversion distributions but have not yet converted. The only one that will do so before Jan. 1, 2011, appears to be Yellow Pages Income Fund (TSX: YLO, OTC: YLWPF). That deal is now set to take place on or about Nov. 1, after receiving final court approval on Oct. 1, at which time Yellow Pages Income Fund will become Yellow Media Inc.

All 16, including Yellow, have clearly stated exactly what their distributions will be after conversion. As a result, there’s no longer any uncertainty about what 2011 will bring.

Some will not cut distributions when they make their move. Others will. Yellow, for example, will cut its monthly payout to CAD0.0542 per unit starting with the payment scheduled for Feb. 15. That’s roughly a 19 percent reduction from the current rate. It’s hardly a surprise, however, as management first announced the planned reduction on Feb. 11.

The point, however, is by clearly stating their policies these companies have completely eliminated all uncertainty regarding what 2011 taxation means. The market knows what’s up and has priced it all in. That means there’s absolutely no additional downside ahead from this issue. In fact, there’s considerable upside as more and more investors realize the danger has long since passed and come out of hiding.

As for the remaining three, the latest from ARC management–per a presentation to the North American Oil & Gas Conference last month–is that all systems are go with its development of shale gas reserves at the Montney property. Costs have been driven down 60 to 65 percent this year at Dawson due mainly to improved geologic intelligence and plans are on track to double output there in three years.

Falling costs and rising output–coupled with timely use of hedges, particularly for natural gas output–are a major reason management’s current plans “see a dividend policy similar to the existing distribution policy with dividends being paid monthly.” These are good reasons to expect ARC’s post-conversion dividend policy will be closer to Enerplus Resources Fund’s (TSX: ERF-U, NYSE: ERF) decision not to cut than to the larger cuts at Penn West and Peyto.

IBI Income Fund has won unitholder approval for its planned conversion to a corporation on Jan. 1, 2011. These plans don’t include a specific post-conversion dividend target. But given the alignment of management and unitholder interests and the sizeable percentage of income earned outside Canada and therefore the tax, it’s a safe bet the payout will be as high as possible. Management has said as much several times, stating the new distribution will be “based on earnings and cash generated” and that “IBI will continue to be a relatively high distributor of cash earned.”

I expect to see more detail on the conversion when the company announces its third-quarter earnings and holds its conference call, projected on or about Nov. 4. Until then, the 10.5 percent plus yield is clearly pricing in a sizeable cut already, so it won’t take much to beat expectations.

IBI Income Fund units are already up 24 percent since the beginning of September, and I expect more as remaining 2011 uncertainty is cleared away. The designer of major infrastructure projects is still a buy up to USD15 for those who don’t already own it.

As for Parkland, management has given investors a target range for a post-conversion dividend of between 75 and 110 percent of the current monthly rate of CAD0.105 per unit. Those were terms first laid out in March, and the company has been careful to say the final amount would depend on prevailing business conditions. That means mainly its success integrating recent acquisitions and the impact of commodity prices on refining margins.

The good news is both areas appeared to be supportive if a high level of distributions as of the company’s second-quarter conference call in August. The bad news is we’re not likely to know for certain what the payout will be until third-quarter results are released, on or about Nov. 5. But even if the dividend is only 75 percent of the current level–the worst-case scenario under management’s guidance–it will still be more than 8 percent based on Parkland’s current price.

That’s more than enough of a dividend to justify my buy target, especially considering the diversified downstream petroleum company’s considerable prospects for future growth. At its current price, Parkland Income Fund is a very strong buy up to USD13 with no real 2011 risk.

Post-Conversion Returns

Pending 2011 taxation is no longer a major risk to Canadian Edge Portfolio stocks. The key now is what makes them appealing going forward.

Looking purely at dividends, only a handful of picks still offer the double-digit yields that were so plentiful just a year ago. Those that have elected to hold their distributions steady after converting have rallied strongly to higher valuations. Shareholders have reaped the benefits as sizeable capital gains. But yields for new buyers are now in the 6 to 10 percent range rather than the 8 to 12 percent level.

As pointed out above, those that have cut distributions to reflect the new taxes have also rallied, as they’ve universally beaten expectations. The result their yields are pretty much in the same range those as the trusts that haven’t cut.

The good news: Our Portfolio picks still yield anywhere from 2 to 4 percentage points more than what equivalent US companies do. Whether you purchase them on the Toronto Stock Exchange (TSX), the New York Stock Exchange (NYSE) or over the counter (OTC), your dividends are paid in Canadian dollars, and they’re priced in Canadian dollars as well. That means any appreciation in the loonie against the greenback translates into an automatic dividend increase in US dollar terms as well as a capital gain in US dollar terms.

Currently the Canadian dollar trades just slightly below parity with the US dollar, with rate at this writing about CAD1.02 per US dollar.

The Canadian government has been vigilant about not allowing the loonie to rise too far too fast versus US currency, to avoid disadvantaging exports to the US and elsewhere.

Given the country’s stronger banking system, much more solid fiscal position–its budget is on track to balance the next few years–and its natural resource export bounty, a higher Canadian dollar-US dollar exchange rate looks all but inevitable in coming years.

And if the most pessimistic are half right and the buck goes into freefall, the loonie will be among the biggest winners.

I for one don’t advocate anyone who pays their bills in US dollar put all of his or her portfolio into investments denominated in foreign currency, including the Canadian dollar. In fact, as we’ve seen several times over the past few years, the Canadian dollar-US dollar exchange rate can actually be quite volatile at times. We’re still in the same market we’ve been in since mid-2008, with the US dollar still considered the safe haven to run to when the global economic news seems to turn sour. And on bad days, things can get tough on the loonie, despite Canada’s superior economic position.

But being denominated in and paying dividends in Canadian dollars does make Canadian Edge Portfolio holdings a very attractive way to hedge against future problems here. And as long as the global economy continues its halting but inevitable recovery, the long-term direction for both the Canadian currency and therefore stocks will be up.

So what kind of yields can we expect to see? For the 11 recommendations that have already converted and the half dozen that don’t have to, what you see now in the Portfolio table is what you get.

Whatever post-conversion adjustments that had to be made have already been made. Distributions from here on in will depend solely on the prospects for the underlying businesses. And the betting here is the next step will be increases. Here they are:

• Ag Growth International (TSX: AFN, AGGZF)
• AltaGas Ltd (TSX: ALA, OTC: ATGFF)
• Artis REIT (TSX: AX-U, OTC: ARESF)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)
• Blue Ribbon Income Fund (TSX: RBN-U, OTC: BLUBF)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)
• Colabor Group (TSX: GCL, OTC: COLFF)
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)
• EnerVest Diversified Income Trust (TSX: EIT-U, OTC: ENDTF)
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)
• Newalta Corp (TSX: NAL, OTC: NWLTF)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)
• Perpetual Energy (TSX: PMT, OTC: PMGYF)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)
• TransForce (TSX: TFI, OTC: TFIFF)
• Vermilion Energy (TSX: VET, OTC: VEMTF)

Eight Portfolio members haven’t yet converted but have affirmed they’ll be maintaining distributions at current levels when they do. Again, what you see in the Portfolio table is what you’ll be getting after conversions. And my bet is we’ll be seeing increases in the not too distant future for each, including for those whose profitability is affected by changes in commodity prices. They are:

• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)
• Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)
• Phoenix Technology Income Fund (TSX: PHX-U, OTC: PHXHF)

The third group is comprised of seven trusts that have declared their intention to convert to corporations, have set a date for that to take place and have established a post-conversion distribution below the current rate. As I’ve said above, the prospective dividend cuts are now well known and baked into their share price.

There is, consequently, no real downside risk when they actually do make the cuts. That’s the market has now adjusted share values to their prospective yield levels. Even if there is some selling on the part of those not paying attention–a group that hopefully won’t include any Canadian Edge readers, since I’ve written exhaustively about all of these companies–it will be quickly compensated for by buyers who spot value.

Such a selloff would be a buying opportunity should it occur. And it might be a reason to adopt a strategy of setting buy limits at a “dream” buy-in price. But no one should expect value to last long, and speed will be of the essence for anyone trying to take advantage.

Here’s the list, along with what the yield would be were these companies paying at their declared post-conversion rates now. Note that Penn West Energy Trust has already cut its distribution to its promised post-conversion level, three months in advance of its actual conversion. What you see now in the table is indeed what you’ll be getting then:

• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)–CAD0.475 per quarter, 7.3%
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–CAD0.0629 per month, 6.6%
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–CAD0.30 per quarter, 6.2%
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–CAD0.09 per month, 5.1%
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–CAD0.06 per month, 4.8%
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–CAD0.045 per month, 7.5%
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–CAD0.0542 per month, 11.9%

As I wrote above, three trusts–ARC Energy Trust, IBI Income Fund and Parkland Income Fund–still haven’t told us what their post-conversion distributions will be. So it’s impossible to say for certain what their yields will be in 2011. Odds are strong, however, that they’ll be dishing out in the same range as the companies above.

That also goes for High Yield of the Month and new Aggressive Holding Canfor Pulp Income Fund (TSX: CFX-U, OTC: CFPUF). The company actually boosted its monthly distribution to CAD0.25 last month, taking its current yield to nearly 21 percent. But it’s made no bones about the fact that future payments will depend on the health of its core pulp and paper market.

The currently very high distribution is a function of two things: management’s strategy of paying out an average of 90 percent of distributable cash flow (DCF) after maintenance capital expenditures and the good health of its markets.

The liberal payout policy is set to endure past conversion and well beyond. The reason is resource giant Canfor Corp (TSX: CFP, OTC: CFPZF) owns 50.2 percent of the same partnership that contributes all of the income fund’s cash flow (49.8 percent ownership). The high distribution is how Canfor Corp gets its money from its investment, just as ordinary shareholders do.

The high level of profitability, in contrast, depends on the health of often volatile global pulp and paper markets. And DCF is going to be cut at conversion by the partnership’s estimated 25 to 30 percent projected effective cash tax rate.

The income fund is attractive primarily now because at a 21 percent yield it’s pricing in a lot of downside risk to the distribution. And even a halving of the current rate would leave plenty of reason to buy up to my long-standing target of USD15. But no one should jump into this one without the expectation that the current distribution rate is going to be very volatile going forward.

Need further proof? A year ago the monthly payout rate was just a Canadian penny a share. A year before that is was CAD0.12, and three years ago it was CAD0.18, after ratcheting up from 12 cents in 2006.

As I wrote in September’s Feature Article, I expect all Portfolio companies to return to the practice of distribution growth that they held to before Halloween 2006. Rather than a fixed rate like a bond, post-conversion yields are merely a baseline for future growth.

That particularly applies to my Conservative Holdings, whose earnings don’t directly depend on commodity prices and, in most cases, the level of economic growth either. For the past four years most of them have tried to outgrow their prospective 2011 taxes. Current dividends generally represent what they’re comfortable with paying under very conservative assumptions.

As a result, once they return to dividend growth they can be counted on to do so regularly. That’s the formula that pushed their share prices higher as trusts like clockwork before Finance Minister Flaherty made his move. And it’s what they’ll do as corporations once they get used to paying taxes.

Aggressive Holdings’ dividend boosting prospects, in contrast, are considerably more explosive, though again they’re going to depend heavily on what happens to the price of energy and other commodities.

Of the oil and gas producers, only Vermilion Energy (TSX: VET, OTC: VEMTF) was able to avoid a dividend cut amid the past couple years’ extreme energy price volatility. That was largely because of it derives more than 70 percent of income from selling into Europe and Asia, where natural gas prices were considerably higher than in North America. And foreign based income is also exempt from the new taxes, limiting the company’s tax burden and enabling it to convert to a corporation easily.

Looking ahead, the most appealing feature of Vermilion is its ability to boost output growth, even in an environment of weak North American natural gas prices. Happily, that’s also true of the other oil and gas producers I’m holding, including ARC, Daylight Energy Ltd (TSX: DAY, OTC: DAYYF), Enerplus, Penn West, Perpetual Energy (TSX: PMT, OTC: PMGYF) and Peyto.

Rising production profiles don’t guarantee immunity from volatile energy prices, particularly weakness in natural gas–far from it. But these companies’ conservative financial policies have insulated them from the worst of the volatility. And their post-conversion dividend levels are easily sustainable after taxes, and even at lower energy prices. That leaves a lot of upside as production ramps up, particularly if energy prices get stronger.

As the record of other trusts to convert demonstrates, being organized as a corporation doesn’t mean management won’t boost distributions if energy prices justify it. If oil and gas prices revisit the 2008 highs, our holdings will be ramping up dividends along with them. Conversely, if energy prices drop further, there will be cuts.

In short, conversions or no, the same rules apply to investing in all Canadian Edge Holdings. The key to wealth-building and sustaining/growing distributions is still the health of the underlying businesses. The companies that run the best will generate the biggest returns. And finding them is still my primary goal.

What to Watch

With the vast majority of income trusts either converted already or committed to a set level of post-conversion dividends, 2011 is no longer a major concern for investors. Rather, everyone’s interest should be squarely fixed on third-quarter numbers, which we’re going to see over the next several weeks.

As is usually the case, the first numbers to be released for this round are already out from food and grocery products distributor Colabor Group (TSX: GCL, OTC: COLFF). The results were below what a number of Bay Street analysts were expecting, resulting in a considerable two-day selloff in the shares.

Fortunately, as I pointed out in the Oct. 7 Flash Alert, there’s nothing in the numbers to suggest any immediate danger to the quarterly distribution–which the company held steady when it converted to a corporation last year–or management’s plans for growth. Rather, the shortfall in revenue and reduced margins were due to economic conditions that the company is apparently prepared to weather.

The bad news is margin pressure is likely to continue. Much of the 15.4 percent drop in fiscal third-quarter revenue was due to the loss of a major supply contract in February. Excluding that, sales were off 3.3 percent, primarily due to lower demand from restaurants. Meanwhile, profit margins dropped as the company was forced to drop prices to preserve market share.

Cash flow continued to cover the distribution with a payout ratio of 89 percent per basic share. And the company was able to complete the purchase of RTD Distributions, boosting its market position in Atlantic Canada and Quebec even as the balance sheet remained solid.

Debt is now just 0.4 times annualized cash flow, after a reduction to just CAD9.2 million drawn on a bank credit agreement of CAD20.5 million.

Encouragingly, Colabor’s legacy operations in its original market of Quebec were a bright spot in the results. Rather, the weakness has been primarily in newer markets, particularly Ontario, and management is hard at work bringing them up to speed.

In its quarterly Management Discussion & Analysis (MD&A), management states “cash flows from operating activities and the funds from operating credits are sufficient to support planned capital expenditures, working capital requirements, quarterly dividends of 26.91 cents Canadian per share and will comply with the banking syndicate’s ratio requirements.”

That’s pretty strong affirmation that weaker than expected third-quarter results will not threaten the company’s dividend, financial health or plans for growth. I’ll be watching for potential deterioration going forward, as well as any sign management is changing strategy. But given the contraction in the food services business, particularly in Ontario, the company’s performance holding and even growing market share while actually strengthening its balance sheet is actually quite impressive.

Further, as management points out in the MD&A, “in the medium term, there will be opportunities to acquire convenience store networks currently owned by major food chains wishing to return to their original niche, serving medium and large-sized grocery stores. That in its view means “despite the economic downturn….the company (can) significantly increase its purchasing power and ability to generate cost savings in order to increase its net earnings.”

The biggest longer-term risk for Colabor is a potential deepening of the slump in the food service industry. The company has mitigated the risk of losing wholesale customers by inking a series of long-term contracts. But there’s no assurance those wholesalers won’t lose business. The company is also dependent on the health of chains it serves, though again management has been diligent about inking long-term contracts of 10 years with provisions for extensions.

The good news is there are signs of stabilization throughout the company’s business, and the acquisitions and cost-cutting will help. And the dividend yield of 9.5 percent, price-to-book value of just 1.5 and price-to-sales ratio of just 21 percent bake in a lot of risk that we’ve yet to see. Colabor shares had been trading well above my buy target of USD12 before the earnings disappointment. Given the company’s long-term growth prospects and conservative financial policies, I view the pullback as an opportunity for those who haven’t bought yet to get in. Colabor Group is a buy up to USD12.

Payout ratios are a major part of the Canadian Edge Safety Rating System. And I’ll be looking carefully at the numbers reported by all How They Rate companies, particularly Portfolio members. The other number is debt, particularly maturities in 2010 and 2011.

The threat of a reprise of the 2008 credit crunch diminish every day, as corporations restructure their balance sheets at the most favorable interest rates in more than 40 years. But it is important to make look at maturities to ensure there’s no hidden liability, particularly at companies that make acquisitions.

The figures shown below for Portfolio companies’ debt maturities and expiring credit agreements in 2010 and 2011 reflect second-quarter data. I’ll be updating them in the coming weeks. Figures shown are debt due before the end of 2011 as a percentage of market capitalization, along with the percentage that has fallen or risen over the past month.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–0.0%, -100% (debt due, change)
• Artis REIT (TSX: AX-U, OTC: ARESF)–0.3%, same
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–0%, same
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)–0%, same
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–0%, same
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–0%, same
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–0%, same
• Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF)–0%, same
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–0%, same
• Colabor Group (TSX: GCL, OTC: COLFF)–9.7%, same
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–0%, same
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)–0%, same
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)–0%, same
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–1.9%, -8.6%
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)–0.1%, -96.6%
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)–11.5%, same
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–0%, same
• Pembina Pipeline Income (TSX: PPL, OTC: PBNPF)–1.0%, -10%
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–3.9%, same
• TransForce (TSX: TFI, OTC: TFIFF)–0%, same

Aggressive Holdings

• Ag Growth International (TSX: AFN, OTC: AGGZF)–0%, same
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–0%, same
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–22.9%, same
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)–0%, same
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)–0%, same
• Newalta Corp (TSX: NAL, OTC: NWLTF)–0%, same
• Parkland Income Fund (TSX: PKI-U, OTC: PKIUF)–0%, same
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–2.8%, same
• Perpetual Energy (TSX: PMT, OTC: PMGYF)–0%, same
• Peyto Energy Trust (TSX: PEY, OTC: PEYUF)–0%, same
• Phoenix Technology Income Fund (TSX: PHX-U, OTC: PHXHF)–0%, same
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–8.1%, same
• Vermilion Energy Trust (TSX: VET, OTC: VEMTF)–0%, same
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–3.2%, same

None of these companies have significant refinancing risk. And the majority of what is outstanding isn’t due until late in 2011. That’s plenty of time for all of these high-cash-generating companies to refinance or even pay off what’s owed with cash.

Here’s the list of 16 CE Portfolio companies that have never once cut dividends. Of this list, IBI and Parkland have yet to declare definitive post-conversion dividend policies. The rest have put 2011 risk behind them and are safe enough for even the most conservative investor. See the Portfolio table for current yields and prices.

• Ag Growth International (TSX: AFN, OTC: AGGZF)
• Artis REIT (TSX: AX-U, OTC: ARESF)
• Atlantic Power Corp (TSX: ATP, OTC: ATLIF)
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)
• Brookfield Renewable Power Fund (TSX: BRC
• Canadian Apartment Properties REIT (TSX: CAR, OTC: CDPYF)
• Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF)
• 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)
• Parkland Income Fund (TSX: PKI-U, OTC: PKIUF)
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)
• Vermilion Energy Trust (TSX: VET-U, OTC: VETMF)

Finally, here’s when we can expect to see third-quarter earnings reported for Portfolio picks. Readers can anticipate a Flash Alert running down the most important numbers at each company on or around these dates, along with any action needed. I’ll have a full review of those reporting in the November issue.

Conservative Holdings

• AltaGas Income Trust (TSX: ALA-U, OTC: ATGFF)–Oct. 28
• Artis REIT (TSX: AX-U, OTC: ARESF)–Nov. 11
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Nov. 10
• Bell Aliant Regional Communications Income Fund (TSX: BA-U, OTC: BLIAF)–Nov. 10
• Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF)–Nov. 9
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–Nov. 3
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Nov. 12
• Cineplex Galaxy Income Fund (TSX: CGX-U, OTC: CPXGF)–Nov. 10
• CML Healthcare Income Fund (TSX: CLC-U, OTC: CMHIF)–Nov. 11
• Davis + Henderson Income Fund (TSX: DHF-U, OTC: DHIFF)–Nov. 2
• IBI Income Fund (TSX: IBG-U, OTC: IBIBF)–Nov. 4
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)–Nov. 12
• Just Energy Income Fund (TSX: JE-U, OTC: JUSTF)–Nov. 5
• Keyera Facilities Income Fund (TSX: KEY-U, OTC: KEYUF)–Nov. 2
• Macquarie Power & Infrastructure Income Fund (TSX: MPT-U, OTC: MCQPF)–Nov. 3
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Nov. 10
• Pembina Pipeline Income Fund (TSX: PIF-U, OTC: PMBIF)–Oct. 28
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Oct. 26
• TransForce (TSX: TFI, OTC: TFIFF)–Oct. 29

Aggressive Holdings

• Ag Growth International (TSX: AFN, OTC: AGGZF)–Nov. 12
• ARC Energy Trust (TSX: AET-U, OTC: AETUF)–Nov. 1
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Nov. 11
• Daylight Energy (TSX: DAY, OTC: DAYYF)–Nov. 4
• Enerplus Resources Fund (TSX: ERF-U, NYSE: ERF)–Nov. 12
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Nov. 5
• Parkland Income Fund (TSX: PKI-U, OTC: PKIUF)–Nov. 5
• Penn West Energy Trust (TSX: PWT-U, NYSE: PWE)–Nov. 5
• Perpetual Energy (TSX: PMT, OTC: PMGYF)–Nov. 9
• Peyto Energy Trust (TSX: PEY-U, OTC: PEYUF)–Nov. 11
• Provident Energy Trust (TSX: PVE-U, NYSE: PVX)–Nov. 10
• Trinidad Drilling (TSX: TDG, OTC: TDGCF)–Nov. 4
• Vermilion Energy Trust (TSX: VET, OTC: VEMTF)–Nov. 5
• Yellow Pages Income Fund (TSX: YLO-U, OTC: YLWPF)–Nov. 4