A growing business is the best guarantor of a high yield. And it’s the hallmark of both September High Yield of the Month selections, new Aggressive Holding Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF) and longtime Conservative Holding Artis REIT (TSX: AX-U, OTC: ARESF).

I’ve had my eye on Crescent Point since mid-2009, when the then-income trust announced it would convert to a corporation while maintaining its monthly distribution of CAD0.23. Prior to that the company was one of three oil and gas producers under Canadian Edge How They Rate coverage to avoid a distribution cut during the 2008-09 market crash/credit crunch/recession, when oil prices crashed from over USD150 per barrel to below USD30.

Crescent weathered both of those challenges in part because of conservative financial policies but also because of a strong reserve position in the Bakken region. And the resulting surge in its stocks price in 2009 opened the door to completing a series of transforming acquisitions financed with its high-flying stock.

Producing at a rate of 66,112 barrels of oil equivalent per day (boe/d) in the second quarter, Crescent has emerged as one of the larger intermediates. That was 20.4 percent above last year’s level of output.

The company is on track to achieve annual guidance of 72,500 boe/d and an exit rate for the year of 76,500. That number was revised up from 75,000 during the company’s second-quarter conference call.

Also with the earnings release, Crescent lifted its 2011 capital budget from CAD800 million to CAD1 billion. This will be devoted almost entirely to boosting and developing the company’s inventory of light and medium-weight oil properties, which currently account for roughly 92 percent of overall output. These include more than 6,500 “low-risk” drilling locations in four large resource plays, with 450,000 boe/d “risked potential production additions.”

The company holds a dominant position in the Viewfield Bakken–the Canadian portion of the North Dakota Bakken–and the Lower Shaunavon in southwest Saskatchewan. The latter is the third-largest resource pool ever discovered in Canada, and the company owns 90 percent of the land.

It’s also acquired land in the Swan Hills area of west central Alberta, which Vice President of Engineering and Business Development Neil Smith asserted during a recent presentation “could potentially double our current net asset value in the next three to five years.” Smith put overall investment opportunities at $12 billion with potential returns from 50 to 500 percent.

Crescent has been a major beneficiary of high oil prices in recent years. And it’s locked in prices between CAD83 and CAD101 per barrel of oil equivalent (boe) for 55 percent of expected 2011 output and 49 percent of 2012 production as well as 37 and 19 percent of output for 2013 and 2014, respectively. The company typically hedges up to 65 percent of planned output.

That limits some of the cash flow exposure to the ups and downs of oil prices. So does the company’s torrid rate of output growth and its ability to control costs. Operating costs were cut 5 percent per boe from year-earlier levels, a major factor lifting second-quarter funds from operations 35.7 percent. And the company has the potential to boost recovery factors at its Bakken wells with water flood technology to greater than 30 percent from primary recovery of 19 percent. That promises to further lift output and cut costs.

Realized selling prices for oil were 33 percent higher than a year ago at roughly CAD95 per boe. That number could be a bit lower in the second half of 2011 after black gold’s recent pullback. Current natural gas prices, however, are roughly flat with second quarter realized natural gas prices, so there should be little if any drop off there.

As for finances, debt-to-annualized cash flow is among the industry’s lowest at just 0.88-to-1. The company has no outstanding debt maturities until its revolving credit agreements come up for renewal in 2014. And as of the end of the second quarter it had CAD965 million in unused credit with which to help finance future acquisitions.

That picture of cash flow stability and robust output growth stands in contrast to the stock’s lackluster performance this year as well as a recent swoon that’s pushed up the yield up toward 7 percent. It’s clear that Crescent Point, like other oil-producer stocks, is going to fluctuate with crude prices going forward.

That’s likely to be a very good thing in my view, however, and the market’s turmoil is a great time to lock away shares of this solid company. Buy Crescent Point Energy up to USD48.

Artis REIT was also able to maintain its distribution during the 2008-09 debacle, which wreaked havoc on the commercial property market in its core Alberta region. One big reason was below market rents underlying all of its high-quality office properties, which enabled the REIT to continue increasing income even as rivals floundered.

Strong operating numbers didn’t prevent Artis’ units from plunging to less than USD4 in December 2008 from a pre-2008 crash level in the mid-teens. But they did ensure eventual recovery, even as low-cost capital allowed management to grow its property portfolio at a rapid clip.

Second-quarter revenue hit CAD65.9 million, up 68 percent from year-earlier levels. Funds from operations were 71.5 percent higher in dollar terms and 11.5 percent on a per-unit basis. Moreover, same-store profits–excluding acquisitions made over the past year–moved higher by 1.1 percent, demonstrating management’s ability to boost profitability after new deals are done. Occupancy including committed space rose to 96.3 percent, an impressive 30 basis point improvement from the end of the first quarter.

Looking ahead, Artis’ growth looks to be further spurred by acquisitions. The REIT acquired 14 commercial properties during the second quarter for an aggregate CAD306.5 million. These will add to second-half income, even as management seeks out more deals. Six of these properties are office buildings, two are industrial sites and six are retail sites. Six of the properties are located in Ontario, four in Minnesota, with the remainder in Saskatchewan, Winnipeg and Phoenix. The company also closed on an industrial property in Minnesota and an office property in Alberta after the end of the quarter.

Portfolio quality is high, with tenant retention in 2011 at 78.9 percent of leases up for renewal with an average rent increase of 4.8 percent. Average rents are estimated to be 3.1 percent below market portfolio wide, with expiring leases for the rest of 2011 and 2012 basically at market.

About 64.1 percent of gross leasable area is occupied by “national” or government tenants, considered the most creditworthy possible. The largest single tenant accounts for 2.8 percent of gross revenue, sharply limiting potential exposure to an unexpected meltdown at a single customer.

Prior to the 2008 crash, Artis’ portfolio was heavily concentrated in Alberta. That definitely contributed to the extreme volatility in the REIT’s unit price, as investors fretted about the collapse of that region’s then hot property market.

As of mid-August the percentage of properties in Alberta was down to just 30.3 percent, while 22.8 percent was in the US, 19.5 percent in Manitoba, 12.1 percent in Ontario and 9.7 percent in British Columbia. That diversification doesn’t eliminate exposure to the ups and downs of the energy patch. But it does mean, for the first time in the REIT’s history, that it should be able to maintain stable performance, whether oil is at USD150, USD30 or somewhere in between.

The payout ratio has risen in recent quarters, as Artis has used equity to finance deals and triggered near-term dilution. The drop in the payout ratio to 90 percent in the second quarter is a sure sign the new properties are starting to produce cash flow in line with management expectations.

Meanwhile, debt-to-book value has dropped to 50.7 percent from 52.6 percent at the end of December, and it’s well below the 70 percent cap under the REIT’s lending agreements. The weighted average interest rate on that debt had dipped to 4.73 percent, a 10 basis point decline from the end of the first quarter. The average term is 4.4 years. Management expects to refinance maturing debt at even lower rates, though it has demonstrated skill at placing hedges where needed in volatile markets.

Investment in the US has created some foreign exchange risk for Artis. That wasn’t significant to the REIT in the second quarter of 2011, thanks to conservative accounting, though it could be in the future depending on the level of expansion. Meanwhile, the properties are of high quality and were acquired cheaply.

The Calgary office market–once the REIT’s major source of income–has been a weak point. But as Chief Accounting Officer Kirsty Stevens noted during the REIT’s second-quarter conference call, there’s “a lot of positive information coming through” now and management believes “market rents will be increasing at rates well above the inflation rates as we move through 2012 and 2013.”

That may be the catalyst that eventually breaks Artis’ unit price above its late 2007 high of USD18-plus, which it hit when it was arguably a much less valuable company. The current price is just 99 percent of book value, a level well below that of many US REITs with far lesser yields and lower asset quality.

A return to dividend growth isn’t likely until the payout ratio comes somewhat lower than the current 90 percent level.

But with a current yield north of 8 percent and paid in Canadian dollars, the payout is already vastly superior to every other high-quality REIT in North America, as is the REIT’s ongoing growth rate. Buy Artis REIT up to my target of USD15 if you haven’t yet.

What can go wrong at Artis and Crescent Point? REITs are always at risk to making a bad investment, and a real crackup in the US investment would only be evident from a bad set of numbers.

As most of the acquisitions south of the border are relatively recent, those figures aren’t yet available. US properties earned USD4.7 million (USD3.6 million from unrealized appreciation) in the three months ended Jun. 30 versus just USD25,000 a year ago. As a result, they’ll be much more important going forward.

At Crescent Point, the major risks are dry holes and the possibility of a steep drop in oil prices. Again, this company held its dividend steady in late 2008, while oil was bottoming under UsD30 a barrel. But a steep and prolonged drop in oil would definitely knock Crescent shares lower. As recently as late 2010, for example, they traded in the upper 30s. The late-2008 bottom was the high teens.

Other than that, however, it would take quite a bit to really knock either Artis or Crescent Point off its game. I plan to have both in the CE Portfolio for years to come.

For more information on these companies go to How They Rate and click on their names to go directly to their websites. Crescent Point is covered under Oil & Gas. Statistics are also tracked in the Oil & Gas Reserve Life table, accessible under the Portfolio tab on the Canadian Edge website. Artis is tracked under Real Estate Trusts. Click on their US symbols to see all previous writeups in Canadian Edge and CE Weekly. Click on the Toronto Stock Exchange (TSX) symbol to go to their Google Finance pages for a wealth of information, ranging from news releases to price charts.

Crescent Point has a current market capitalization of CAD11.5 billion, ranking it firmly as an intermediate producer. Artis’ market cap is roughly CAD1.1 billion, placing it in the mid-rank of the real estate investment trusts I cover in terms of size. Both stocks trade with good volume on their home market, the TSX. They also trade decent volume under the US over-the-counter (OTC) symbols, particularly Crescent.

Whether you buy these stocks in the US or Canada, you get the same ownership of a solid, growing and big-dividend-paying company. Your dividends will be paid in Canadian dollars, and US investors will score capital gains when the loonie rises against the greenback.

Crescent’s distributions are 100 percent qualified for US tax purposes, and dividends paid into a US IRA aren’t subject to 15 percent Canadian withholding tax. Artis’ dividends are also qualified for US tax purposes, though they will still be withheld 15 percent by Canadian authorities if held in an IRA.