For more than a century, few if any trends have been as inevitable and inexorable as rising global demand for electricity. And despite great leaps forward in efficiency, that’s virtually set in stone for the next hundred years, as developed and emerging economies alike continue to electrify.

Companies that produce and/or distribute power can stumble and fall–for example, from taking on too much debt or running afoul of regulators. And demand does occasionally drop, as it did in the US during the 2008-09 recession.

Even then, however, electric companies enjoy reliable revenue that’s the envy of every industry this side of regulated water utilities. And as long as they’re competently managed, earnings and dividends will hold up, not matter how bad things get elsewhere.

The same holds true of companies that own and operate energy pipelines and related assets. As long as oil, gas and other refined products are flowing through their systems, they’ll make their money. And their revenues flow from perhaps the most financially power companies in the world: major producers of energy.

Even power and pipeline stocks can lose ground in a particularly rough market, as we saw in late 2008. The difference was the damage was light, and they recovered quickly when the market bottomed. Moreover, those reliable revenues meant they could continue to pay and even increase their generous dividends, even as other companies seem to come unglued daily.

In my view, the likelihood of a reprise of 2008 is still quite remote. Europe continues to struggle with its sovereign debt crunch and many of its economies are chronically weak. The US, meanwhile, is still locked in a pattern of slow and jagged economic growth, just as it’s been since the March 2009 bottom.

The 2008 meltdown, however, was only made possible by the hefty leverage throughout the system, as well as the fact that no one really knew who owned all those bad mortgage securities. Consequently, no one knew where the bombs were going to go off next and the result was extreme uncertainty, high anxiety and abject panic.

In contrast, the amount of sovereign debt in circulation is well known. Many banks and financial institutions around the globe own it. But the vulnerable are also well known to monetary authorities, who in stark contrast to 2008 have had time to prepare a response should one falter.

It’s also hard to argue that anyone is particularly leveraged in this environment. Rather, investors across the board continue to scurry to Treasuries–still the safe haven of last resort despite S&P’s dubious downgrade of Uncle Sam–every time the economic news seems to sour.

There just aren’t the types of bets out there that can create the kind of once-in-a-lifetime systemic crisis as happened in 2008. Rather, the most likely scenario for the rest of 2011 and into 2012 is just more of the same. Credit pressures will continue to keep a lid on economic growth, even as other factors–such as the lowest corporate borrowing rates ever–keep it creeping along.

Should the economy go into reverse and credit markets tighten, however, power and pipeline stocks are the best bets to weather the storm. And that goes double for my picks in Canadian Edge, which pay generous dividends in the Canadian dollar.

The loonie took a bath during the 2008-09 crisis, crashing from well over parity with the US dollar to just 76 US cents. That was largely a reaction to the plunge in the price of oil, which went from a mid-2008 high of over USD150 a barrel to less than USD30 at one point.

This time around, despite a drop in oil from USD115 to barely USD80 a barrel, the loonie has barely budged. In fact, the currency continues to trade at a premium to the US dollar, as markets appear to have finally recognized the country’s fiscal balance, rock-solid banking system and strong trade position–thanks to a bottomless appetite for its natural resources in emerging Asia, particularly China.

Of course, Canada did have these strengths during the 2008 crisis, which is why it suffered only a very mild recession. And these strengths will protect the country if there’s a global recession and market event in 2011, as so many seem to fear.

The difference is the strength the Canadian dollar is showing this time around means Canadian stocks aren’t likely to suffer nearly as much as last time, either. That’s particularly true for US investors, who saw their stocks lose twice as much ground in US dollar terms as they did on the home market in 2008.

Of course, growing businesses–not macroeconomic factors or currency strength–are by far the best guarantor that stocks will continue to build wealth and pay dividends.

And here’s the real reason I’m highlighting select power and pipeline stocks here in September 2011: These stocks are in line for powerful long-term growth that will push up profits and ultimately dividends and share prices.

That’s in addition to robust yields paid in the solid Canadian dollar.

That combination is hard to beat in any market, let alone one riddled with so many uncertainties. Buying a basket of these stocks–many of which are Canadian Edge Conservative Holdings–is likely to prove as essential to investors as the services the companies provide.

Pipelines to Profits

Over the past month, the US Energy Information Administration (EIA) has substantially reduced its projections for global energy demand growth in 2011 and 2012. That’s based largely on a lowered forecast for US GDP growth from 2.4 to 1.5 percent this year and from 2.6 to 1.9 percent next.

Even so, however, the EIA still expects global oil prices to average well over USD100 a barrel the next two years. The reason: continued robust demand growth in Asia, despite worries about government efforts to control inflation.

The vast majority of Canada’s oil and gas exports have historically flowed to the US through some 62,000 miles of pipeline. Just three companies currently own the vast majority of this network. Two are Canadian and are tracked in How They Rate: Enbridge Inc (TSX: ENB, NYSE: ENB) and TransCanada Corp (TSX: TRP, NYSE: TRP). The other is US master limited partnership Kinder Morgan Energy Partners LP (NYSE: KMP). Spectra Energy (NYSE: SE) also owns a chunk of capacity.

The main reason for the US bias is geography; it’s far cheaper to ship energy over pipelines to meet US demand than to transport oil, liquefied natural gas (LNG) or natural gas liquids (NGLs) overseas by ship. Also, each of these companies’ networks is interconnected with the tens of thousands of pipeline miles and processing facilities in the US.

The US is certain to remain Canada’s primary market in coming years, particularly if TransCanada’s Keystone XL pipeline is built. The new pipeline would carry as much as 900,000 barrels of oil a day over roughly 1,700 miles from Hardisty, Alberta, through parts of Montana, South Dakota, Nebraska, Kansas and Oklahoma, with a final destination of refineries in Texas.

Keystone XL would for the first time unlock significant amounts of oil mined from Canada’s oil sands for both the US and global markets and create a potentially huge amount of business for US refiners in the bargain. As a result, the project has drawn fervent opposition on the grounds that will encourage accelerated development of so-called “dirty oil.” Others have raised concerns that the proposed route will endanger health and safety where it passes, including a major aquifer providing more than 80 percent of Nebraska’s population with drinking water.

Last month the US Department of State leased its long-awaited environmental impact statement on the pipeline, finding that TransCanada had put in place all needed measures to ensure safety and that any contamination from potential spills would be localized. That would seem to ensure that State will grant final approval for the project later this year.

Opponents–who now include the Dalai Lama–haven’t given up yet, however. And it’s possible President Obama will overrule his State Department and order the pipeline plan rejected, particularly with his campaign for re-election kicking off. On the other hand, building Keystone XL is projected to stimulate USD20 billion of investment in the US economy and the creation of some 118,000 jobs. That may make it tough for a president facing high unemployment to reject.

Should the pipeline be approved, the big winner will be TransCanada. Capital spending and earning a return on it is the key to every energy infrastructure’s company’s growth. And the new capacity is sure to be fully subscribed, ensuring a hefty return on a record-large investment.

Best of all for investors, the controversy surrounding the pipeline means the potential earnings gain isn’t yet reflected in its share price. As a result the yield is nearly 4 percent, and the stock sells for only about 1.9 times book value, despite posting a 30 percent boost in earnings in the second quarter, after taking out one-time items.

That’s the result of the company’s robust capital spending program beyond the Keystone plans, including new gas pipelines brought on stream in the past 12 months in Alberta Mexico and the US West. The company has also started up new power plants in Arizona and Ontario, all of which are now generating cash flow.

This spending plan will continue to boost TransCanada’s earnings, dividends and, eventually, its share price, no matter what happens at Keystone. And if the pipeline is approved and built, growth will be that much faster. TransCanada is a buy up to USD45.

Whether or not Keystone XL is built, interest will continue to grow in exporting Canadian energy to Asia. The company pushing this forward is Enbridge, with the backing of Chinese investors.

The key project at this point is a proposed USD5.5 billion pipeline to bring 525,000 barrels of oil from the oil sands to the Pacific Coast for shipment to refineries in California and Asia. In contrast to the opposition to Keystone XL in the US, the roughly 730 mile proposed Northern Gateway pipeline enjoys strong support from Canadian provincial and federal leaders.

There are still opponents, largely on environmental grounds. And it’s far from a sure thing Northern Gateway will be built. As with Keystone XL, however, additional income from this investment is definitely factored into the share price of Enbridge and its affiliates, such as Enbridge Income Fund Holdings (TSX: ENF, OTC: EBGUF).

Enbridge Income Fund Holdings is a buy up to USD20, as it continues to add capital assets from spending and dropdowns from the parent to fuel its dividend.

The real opportunity from these projects–should either be built–is further down the food chain. That’s the smaller companies that will build and own needed processing and shipping assets that get the finished product to the big pipelines.

All four Canadian Edge Portfolio energy infrastructure companies could stand to benefit from the sudden increase in access to markets. The most direct winner would be Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF), which already has extensive projects in the oil sands and close relationships with both Syncrude and Canadian Natural Resources (TSX: CNQ, NYSE: CNQ), the owner of the Horizon project.

The company already has an ambitious roster of new projects, as I note in Portfolio Update. It remains a core Conservative Portfolio Holding, and it should move much higher in coming years as it ramps up dividends. My advice is still for new buyers to wait on dips to USD25 or lower to buy Pembina Pipeline.

Inter Pipeline (TSX: IPL, OTC: IPPLF) remains a good choice for Canadians on a dip to USD15 or lower, though its charter forbids US investors from buying in. Second-quarter revenue surged 13.2 percent as the company continues to add assets. It already operates two nearly 600 mile pipeline systems transporting oil sands, as well as natural gas liquids extraction plants in Alberta.

My other three CE Portfolio energy infrastructure companies are also ramping up income by adding NGL infrastructure assets: AltaGas Ltd (TSX: ALA, OTC: ATGFF), Keyera Corp (TSX: KEY, OTC: KEYUF) and Provident Energy Ltd (TSX: PVE, NYSE: PVX).

That should keep all three on track for strong cash flow growth and, ultimately, dividend growth. Keyera has already boosted its payout this year, and AltaGas is likely to follow sometime in the next 12 months.

All of these companies rely primarily on fee-based income based on long-term contracts with major energy producers. That gives them revenue security in the near term should the global economy weaken and energy prices drop. Only Provident was forced to cut its dividend during the 2008-09 debacle, and that was when it still had a sizeable oil and gas production operation.

All of these stocks weakened a bit during the summer selloff. That wasn’t enough to knock AltaGas to my target of USD26 or Keyera below my target of USD38.

The rest, however, are either below are right at my targets. All would be great additions at or below those prices, offering high yield, recession protection and outsized future growth potential.

Power Plays

As in the US, Canada’s demand for electricity is expected to rise steadily in coming years, as an increasingly urban population continues to adopt new power-using devices. New demand will be especially strong in the energy patch, as oil sands are opened up for export to either the US or China.

As I’ve pointed out in Canadian Edge on numerous occasions, oil sands development is at its core not a drilling operation but a mining and chemical refining process. That requires an enormous amount of electricity to carry through.

On the other hand, the Canadian government has also been very aggressive setting targets for use of renewable energy and reducing carbon dioxide emissions from power generation.

A year ago the country set tough new standards for fostering biofuels development. That matches renewable energy standards set in nine Canadian provinces that require power companies to generate a set percentage of their electricity from wind, solar and hydro.

As the major utilities are primarily provincial power authorities, that amounts to guaranteed contracts for renewable energy developers and generators. And not only are contracts backed by full support of taxpayers.

But they typically guarantee premium rates and recovery of any change in costs, too. Some–particularly in solar and wind–actually guarantee payment even if conditions inhibit full generation.

After it completes its acquisition of Capital Power LP (see Portfolio Update), Atlantic Power Corp (TSX: ATP, NYSE: AT) will hold several valuable projects. Management plans to follow up with more, particularly in hydro-rich British Columbia. Buy Atlantic Power Corp up to USD16.

Meanwhile, fellow Conservative Holdings Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF), Capstone Infrastructure Corp (TSX: CSE, OTC: MCQPF) and Innergex Renewable Energy (TSX: INE, OTC: INGXF) already have substantial holdings, and are in the process of building more capacity. Innergex has the most aggressive plans to date, with new wind and water projects in development that will nearly double current capacity in the next few years. And it has prospective projects that would potentially add another 2,800 megawatts, or nearly seven times current output of 401 megawatts.

Getting all that up and running is just a matter of executing, and Innergex has been very effective getting such deals done in the past. Even a partial success will result in a big ramping up of dividends in coming years, even as the current payout remains secure almost come what may in the economy. Buy Innergex Renewable Energy up to USD10 if you haven’t yet.

As I point out in Portfolio Update, I’m raising my buy target for similarly wind-and-hydro-focused Brookfield. Unlike Innergex and Capstone, it hasn’t yet converted to a corporation and remains structured as an income trust. That’s likely an overhang on the stock, though I’m willing to raise my target for Brookfield Renewable Energy to USD23 for new investors.

The company has several large projects set to come on line over the next year or two that will lift cash flow and potentially dividends. Meanwhile, the current business is also mostly secured by long-term contracts with provincial authorities and equally creditworthy parties.

Capstone is the most aggressive of my power plays, as indicated by its much higher yield. Risk to the payout, however, is well overblown–despite the high payout ratio–as management has the reserves to support it and has locked in cash flow to take the payout ratio down to a very manageable range of between 85 and 90 percent in 2012. Buy Capstone Infrastructure up to USD9.

Finally, three Canadian electric stocks outside the Portfolio are worth a look now. TransAlta Corp (TSX: TA, NYSE: TAC) is a wholly unregulated generator operating in Alberta, with facilities in Australia, the US and Mexico. The company in the midst of transitioning its fleet from older coal plants to a mix of renewables and state-of-the-art clean coal plants. A 495 megawatt unit started up last month in Alberta is a good example of its success executing these plans.

The company’s primary appeal, however, is the potential growth of power demand in Alberta going forward, and its primacy as a major producer in the region. That should ensure solid dividend growth going forward, even as long-term contracts underwrite the current level. Buy TransAlta up to USD22.

Emera Inc (TSX: EMA, OTC: EMRAF) is an integrated power company of the sort US utility investors are used to. Its cornerstone Nova Scotia Power unit is fully regulated from generation to distribution and is enjoying rising earnings from robust capital spending on renewable energy. The island province has unique potential in tidal energy, and it’s home to the world’s largest such facility, near the town of Annapolis.

These investments flow directly to earnings. But the company is also profiting from recent investments in Maine, where it’s now the leading distributor of power. A successful power investment in three Caribbean countries boosted its operating earnings by 70 percent in the 12 months ended Jun. 30. And the company’s pipelines in North America earned 60 percent more.

Particularly interesting is Emera’s investment in Algonquin Power & Utilities Corp (TSX: AQN, OTC: AQUNF), of which it now owns roughly 24.35 percent. The pair has formed a venture with First Wind Holdings LLC to jointly construct, own and operate wind-power facilities in the Northeast. The pair’s 49 percent interest is “Northeast Wind,” which in turn will be 75 percent owned by Emera and 25 percent by Algonquin.

For its part, Algonquin last month raised its dividend another 7.7 percent, the second boost in the last 12 months. A one-time CE Portfolio Holding, the company continues to benefit from successful investment in water and energy utilities in the US and Canada. Both revenue and cash flow rose at better than a 50 percent rate in the second quarter, as the company added more low risk, fee-based business to its profit mix.

To date Emera management has stated it has no interest in taking all of Algonquin. But with the latter selling at just 1.64 times book value–and well below the price level it once held as an income trust–that has to be considered a possibility.

In the meantime, both Emera and Algonquin appear poised for solid and steady growth in coming years, even as their current revenues, earnings and dividends look virtually bullet-proof, even against a very unlikely reprise of 2008-09.

Neither these companies—nor any of the other companies recommended in this article–would face any significant or refinancing pressure should credit conditions significantly tighten for Canadian companies in the near term. Even Atlantic Power, for example, has been able to lock in a very flexible loan to complete its purchase of Capital Power later this year, ensuring against a financial shock when regulatory approvals are met and payments are made.

Meanwhile, as long as corporate borrowing rates remain at or near all-time lows, all of them can certainly take advantage by locking in low-cost for funding future development. That makes them winners no matter how this uncertain environment swings. Emera is a buy up to USD33. Algonquin Power & Utilities is a buy up to USD6.