The long, winding road from Oct. 31, 2006, to Jan. 1, 2011, revealed a lot of truths about Canada, Canadian income trusts and the ability of public companies to meet the needs of investors. First of all, the Great White North, in the face of a reputation battered by Finance Minister Jim Flaherty’s Halloween Massacre, has proven to be among the most hospitable jurisdictions for investors on the planet, all things considered.

And, most important, we still have a vibrant universe of high-yield stocks from which to build a portfolio. The four-year conversion process–itself a little-heeded gift at the time it was bestowed–worked out much better for the CE coverage universe than anyone save perhaps a couple lonely newsletter editors would have anticipated.

The process also uncovered a couple names worthy of merit as well as inclusion in How They Rate for their wealth-building qualities. Where we ignored them during their income trust incarnation we now celebrate these two converted corporations for what they say about paying solid distributions, even if the government wants you gone.

Armtec Infrastructure Inc (TSX: ARF, OTC: AIIFF) is one of those companies that makes things that show up all around you all day but you don’t even know it. It manufactures and markets all manner of systems and products for soil retention and water management, including high-density polyethylene, corrugated steel and concrete pipe, and it also makes an array of pre-cast, pre-stressed architectural concrete products for use in building and bridge construction.

Armtec has offices in every region of Canada and operates all over North America and in select global markets. Areas of concentration include Canada’s national and regional public infrastructure markets and private-sector markets in agricultural drainage, commercial building, residential construction and natural resources extraction. Armtec bills itself as “Canada’s only national multi-material manufacturer.”

The “indicated yield” of 12.5 percent widely quoted by data providers still reflects the last income-trust level payout rate of CAD0.18 per month, or CAD2.16 annualized. Armtec will announce fourth-quarter and full-year 2010 earnings on Mar. 11, at which time it could also declare its first corporate dividend at the new rate of CAD0.40 per share per quarter, or CAD1.60 annualized, which is a 25.9 percent reduction that reflects the approximate impact of entity-level taxes on Armtec’s cash flow.

We’ll have a recap of Armtec’s most recent quarter and year in the April issue.

Premium Brands Holdings Corp (TSX: PBH, OTC: PRBZF) has gone from lows in the CAD6.60s in December 2008 to its current perch in the CAD16.60s while maintaining a surprisingly consistent dividend.

The food processor with manufacturing facilities in Canada and the US did have a rocky time during the financial/credit/economic crisis that engulfed most of the market from 2007 to 2009. But its line of branded processed meats, pre-packaged sandwiches and burgers, and frozen food provide resilient during the Great Recession.

Even after what can only be described as a prodigious run since making its bottom in December in 2008, Premium Brands is spinning off a yield of more than 7 percent. That’s healthy, especially considering the rigors this company has endured and the consistency it displayed come what did.

Premium Brands paid a monthly distribution of CAD0.098 from October 2005 until July 2009, basically the duration of its life as an income trust. Upon its first post-conversion payment, in October 2009, management instituted a quarterly payment of CAD0.294–which is equivalent to the pre-conversion annualized distribution of CAD1.18.

And Bay Street is uniformly bullish, as all six analysts who cover the stock rate it a buy. In fact in late February Scotia Capital established new coverage of the stock, with a “sector outperform” rating and a target price of CAD20.

One more cut-less converter in the mix can only make How They Rate a more useful tool for discovering wealth-building investments; we’ll follow it under Food and Hospitality. Look for word in Premium Brands’ fourth-quarter and full-year 2010 earnings, which will be revealed Mar. 10, in the April CE.

Crisis in the MENA, Opportunity in the Oil Sands

In mid-January, about a week before the Egyptian revolution catalyzed uprisings across the Middle East, the International Energy Agency (IEA) warned that “triple-digit oil prices risk damaging” the economic recovery. It was interpreted in many quarters as a message to the Organization of Petroleum Exporting Countries (OPEC) that it should boost output. OPEC suggested the same day that global supplies were sufficient to meet demand.

Rising energy costs were already being cited for rising food costs, the source of much of the tension that broke first in Cairo’s Tahrir Square. But Egypt may be the first domino in a series of regime changes that ratchet regional tension even tighter and squeeze the political premium in the price of oil even higher.

One solution is to localize supply–that is, to better develop the Canadian oil sands–in order to reduce dependence on the Middle East. To say we depend on the Middle East is to say our economy depends on the Middle East. Already, in fact, we’ve seen not-so-subtle signs of pressure from the Americans on the Saudis to boost production, which they say they’ve obliged by boosting output by an estimated 7 percent to more than 9 million barrels per day; there’s little evidence, other than the word of the Saudis themselves, to suggest this is so.

Turmoil in Libya threatens much of an estimated 1.3 million barrels per day of that country’s exports. OPEC won’t meet until June to consider any cartel-wide production increases. Meanwhile the front-month Brent crude contract added USD1.02 in overnight trading to close at USD115.81 a barrel. Brent crude, the best measure of the global oil market right now, is up 22.2 percent from USD94.75 at Dec. 31, 2010.

Even before the price of oil spiked above USD100 MEG Energy Corp (TSX: MEG, OTC: MEGEF), which made its initial public offering in late July 2010, was making good on the promise that attracted well-heeled, deep-pocketed investors such as CNOOC Ltd (NYSE: CEO), which paid USD150 million for a 16.7 percent stake (since diluted to 15.8 percent) in MEG when it was still private.

By cutting operating costs per barrel 73 percent, from CAD52.04 a year ago to CAD14.22 and posting a profit in its first full quarter as a public company management demonstrated its oil sands properties could be particularly valuable. MEG’s steam-to-oil ratio was a strong 2.3 times in the fourth quarter.

MEG had been profitable in 2009, when it was still private. But much of its revenue came from royalties on other assets. Since it started its own production in December 2009, revenues net of royalties have only grown. Net income in the fourth quarter was CAD46.5 million (CAD0.24 per share), reversing a CAD16 million (CAD0.11 per share) loss in the fourth quarter of 2009.

MEG did post an unrealized gain of CAD35.3 million because on the favorable impact of the translation of debt to Canadian terms. Revenue net of royalties rose 10-fold to CAD246.3 million, as fourth-quarter production averaged 27,744 barrels of bitumen per day, about 10 percent above the nominal design capacity of MEG’s facilities.

MEG expects fiscal 2011 production volumes to average between 25,000 and 27,000 barrels per day, accounting for a planned maintenance turnaround in September.

MEG is budgeting CAD900 million for capital expenditures in 2011; the prime objective is to boost bitumen production capacity to 260,000 barrels per day by 2020. A key part of this effort, Phase 2 of its flagship Christina Lake project in Alberta, started up during the fourth quarter, with production averaging 5,933 barrels of bitumen per day.

Management estimates 2011 operating costs at between CAD9 to CAD11 per barrel. Although not as impressive a reduction as that from the fourth quarter of 2009 to the fourth quarter of 2010, it’s still a feat. And the number is likely to be at the low end for all oil sands operators. MEG Energy Corp, new to How They Rate coverage under Oil and Gas, is a hold.

For just about any but the investors who bought at the initial public offering (IPO) price of CAD18 Athabasca Oil Sands (TSX: ATH, OTC: ATHOF) has been a solid bet. Shortly after debuting on the Toronto Stock Exchange the stock traded below CAD16, eventually hitting a trough below CAD10. Athabasca, too, has started to run with the price of crude, as it finally breached CAD18 again yesterday, Mar. 3, following release of its fourth-quarter and full-year results.

The company still does not have commercial operations. It “expects to produce its recoverable bitumen using in-situ recovery methods such as steam assisted gravity drainage” on its 2.5 million acres of resource lands. Key assets include a 40 percent working interest in the Dover project, which comprises 125,000 acres and 250,000 barrels per day of gross peak production potential. Dover West Leduc Carbonates has similar potential, but Athabasca’s working interest here is 100 percent.

Athabasca Oil Sands has deep-pocketed backers who will provide the flexibility the company needs to exploit its lands. By far the most significant event for Athabasca Oil Sands during its 2010, aside from the IPO that raised CAD1.26 billion, was the investment by PetroChina International Investment Company Ltd, through a subsidiary, in the MacKay River and Dover projects. PetroChina paid CAD1.9 billion cash for a 60 percent working interest in both projects and also made credit facilities available to Athabasca, which claimed a CAD1.65 billion gain on the sale of the majority interests. Most important, however, are PetroChina’s deep pockets–and deep interest in the long-term development of the oil sands.

Bay Street maintains a show-me stance, with five analysts rating the stock a “buy” and seven calling it a “hold.” The eight who had an opportunity to survey recent quarterly and annual results all held their current advice, including GMP Capital’s analyst, who reiterated a “buy” rating and a CAD24 target price. That’s the high end; three other Bay Streeters are neutral, with a shared low target of CAD17.

The company continues to add acreage in the Athabasca region that lends its name to the corporate entity, most recently adding land in the Dover West area. In December 2010 management submitted its application to begin work toward eventual production of 250,000 barrels per day at Dover, a tentative step toward commercial operation.