What more can be said about the Canadian economy and its relative strength in the developed world. There’s one country that’s in the same league, and, as you’re probably well aware by now, we’re at work in that corner of the world now, too, identifying high-quality businesses with the wherewithal to sustain and grow dividends under even the worst macro conditions.

There’s a major thread that unites Canada and its Commonwealth cousin Australia, apart from their shared heritage as jewels in the British Empire. That’s low debt and traditions of balanced budgets at the federal level of government. Australia’s debt-to-GDP ratio is remarkable, particularly if you stand it against other developed countries, as we’ve done below.

Canada’s debt-to-GDP ratio–the yellow line just above Australia’s aqua–is a reflection of a decade-plus-long, multi-party commitment to fiscal discipline.

Canada had the flexibility to enact a meaningful Keynesian countercyclical fiscal stimulus because the additional spending wouldn’t overburden the public treasury.

It’s true that Canadians have as much personal debt as their famously maxed-out North American neighbors. But, unlike the US, jobs are being created and wages are increasing in Canada, which helps Canadians service their debts.

Data from Statistics Canada for the most recent period, July 2011, show that average weekly earnings of non-farm payroll employees increased 0.1 percent from the previous month.

On a year-over-year basis average weekly earnings grew by 2.2 percent. This was actually the slowest earnings growth since January 2010, but it provides another favorable point of comparison vís a vís the US.

The US Bureau of Labor Statistics (BLS) reported in mid-August that real average hourly earnings fell 0.1 percent from in July 2011, as a 0.4 percent increase in average hourly earnings was more than offset by a 0.5 percent increase in the Consumer Price Index (CPI). Since reaching a recent peak in October 2010 real average weekly earnings have fallen 1.3 percent. On a year over year basis US income is also off by 1.3 percent.

Canadians also have more equity in their homes, a result of tighter lending standards over the long term and in consequence of Finance Ministry and Bank of Canada efforts to rein in lending in early 2011. That means they have more cushion to sustain declines in home values, should that occur on a broad basis.

Up to now, putting the lie to Standard & Poor’s hysterical early August 2011 downgrade of Uncle Sam from AAA to AA+, Washington, DC’s decades-long profligacy isn’t yet reflected in market interest rates. In fact the yield on the 10-year Treasury is hovering above 2 percent, this after treading blow that mark for extended periods from mid-September to early October.

But for the long term we like Canada’s and Australia’s fundamental strengths and how those strengths fit within a rapidly evolving global economy. Specifically, both countries have established frameworks that will support responsible, profitable development of their respective natural resources.

According to statistics released today by the Canadian Real Estate Association (CREA), national resale housing activity picked up in September, as sales activity rose 2.7 percent from August. Activity during the first nine months of 2011 pulled ahead of sales over the corresponding period of 2010, and the number of new listings in September was steady month over month.

This follows an Oct. 7 StatsCan report that Canadian employers hired 60,900 new full-time workers in August, nearly six times the consensus estimate. Canada’s unemployment rate is now down to 7.1 percent, from 7.3 percent in August. The unemployment rate hasn’t been this low in Canada since December 2008.

September’s housing activity increase reflects strengthened activity in a number of major markets. The monthly increase pushed national sales to the highest level since tightened mortgage regulations dampened sales earlier this year.

The number of newly listed homes nationally was little changed from each of the previous two months. New listings were up from the previous month in a number of major markets, including Toronto, Montreal, Ottawa, Oakville and Vancouver, offset by fewer new listings in other markets including Edmonton and the Fraser Valley.

Inventory stood at 6.1 months at the end of September on a national basis, little changed from the end of August (6.2 months). Months of inventory have held steady at about six since April.

The actual (not seasonally adjusted) national average price for homes sold in September 2011 stood at just under CAD352,600, remaining below record heights reached earlier this year. While up 6.5 percent from September 2010, the year-over-year increase is the smallest since January.

Canadian Edge: A History

From the very beginning of Canadian Edge, as much as we’ve striven to cover as many bases as possible first in the Canadian income trust sphere and then the much broader dividend-paying stock universe, “quality” has been the No. 1 principle.

That’s borne out in the histories of the 10 companies that comprised the original Canadian Edge Portfolio and the 40 that made up the How They Rate coverage universe in July 2004. First of all, eight of the 10 “Portfolio Top Ten” from Issue No. 1 still exist in a form close to the one we first covered. Second, 29 of the 40 individual companies in How They Rate are still on the go, while the other 11 all were bought out at prices that represented at least slight premiums to their prices on the days of their respective deals’ announcements. Broadly speaking, that’s a pretty solid start given the many general and company-specific hurdles they’ve encountered during the last seven years.

To get more particular, let’s start with some reference numbers. From Jul. 30, 2004 (the “recent price” listed in the Portfolio table of the pdf version of CE Issue No. 1 is for Jul. 29, 2004), through Sept. 30, 2011, the S&P 500 generated a total return of 18.9 percent in US dollar terms. The S&P/Toronto Stock Exchange Composite Index’ total return for the same timeframe was 111.1 percent in US dollar terms, 65.2 percent in Canadian dollar terms. And the S&P/TSX Income Trust Index generated a total return of 212.8 percent for US dollar-based investors, 144.9 percent for loonie investors.

The average total return from Jul. 30, 2004, through Sept. 30, 2011, for the original CE Portfolio, including dispositions of two original Holdings and the weight of Yellow Media Inc (TSX: YLO, YLWPF), is 175 percent.

Here’s a company-by-company look at total return performance–dividends/distributions plus capital gain or loss–for the original Canadian Edge Portfolio from Jul. 30, 2004, through Sept. 30, 2011.

ARC Energy Trust is now ARC Resources Ltd (TSX: ARX, OTC: AETUF). ARC has generated a total return of 232.6 percent in US dollar terms, 160.4 percent in Canadian dollar terms. It’s still a cornerstone of the CE Portfolio and a company that converted without cutting its distribution..

Boralex Power Income Fund generated a 32 percent total return from CE’s inception until it was bought out by parent Boralex Inc (TSX: BLX, OTC: BRLXF), though it lost 0.2 percent for Canadian dollar investors. Boralex paid CAD87.93 million to buy out Boralex Power Income Fund unitholders. The target was trading at CAD5.11 per share when the deal closed in November 2010, well off its May 2007 high near CAD11 but also above a December low around CAD2.60.

Calpine Power Income Fund was acquired in February 2007 by Harbinger Capital Partners for CAD827 million, or CAD13 per share. At the time of the deal’s announcement Harbinger’s offer represented a 14.3 percent premium to Calpine Power’s unit price. The income fund generated an 81.5 percent US dollar return through the close of its February 2007 privatization, 59.3 percent in loonie terms.

Great Lakes Hydro Income Fund became Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF) in September 2009. In its new guise Brookfield Renewable, which is still a member of the CE Portfolio, continues to make transformative changes. The stock generated a total return of 160.6 percent in Canadian dollar terms during our reference period, 232.9 percent for US dollar investors. Brookfield Renewable Power remains a CE Portfolio Holding.

Noranda Income Fund (TSX: NIF-U, OTC: NNDIF) is still in business as Noranda Income Fund.

Noranda is basically flat in US dollar terms since July 2004 but is down nearly 21 percent for Canadian investors. We sold it from the CE Portfolio in September 2004 because of the threat of a lawsuit stemming from an accident at one of its zinc processing facilities, making it the first original Holding to depart the Portfolio.

Noranda recently declared a dividend–CAD0.04167 per unit–for the first time since June 2009, as sign its business is stabilizing.

Pembina Pipeline Income Fund converted into Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF) without reducing its monthly payout, which is now CAD0.13 per share.

The solid pipeline owner/operator, which just opened brought in two key projects on time and under budget, has generated a US dollar total return of 408.2 percent since July 2004; for Canadian investors the figure is a no-less-impressive 297.6 percent. Pembina Pipeline also remains a cornerstone of the CE Portfolio.

Equally indomitable RioCan REIT (TSX: REI, OTC: RIOCF) continues in its original form, poised to improve on its 163.3 percent Canadian dollar total return since CE’s inception and its 236.3 percent greenback return. RioCan REIT is still among the CE Conservative Holdings.

Superior Plus Income Fund became Superior Plus Corp (TSX: SPB, OTC: SUUIF) in January 2009. We sold it from the CE Portfolio in April 2006. The stock is down 30.6 percent in Canadian terms, 11.4 percent in US dollar terms from July 2004 through September 2011. That makes it the biggest loser among the originals.

Vermilion Energy Trust converted into Vermilion Energy Inc (TSX: VET, OTC: VEMTF) without cutting its CAD0.19 per share monthly dividend and in the midst of generating a 288.2 percent total return for Canadian dollar investors and a 395.9 percent return for US dollar investors. Vermilion is also still part of the CE Portfolio.

Yellow Pages Income Fund converted into Yellow Media Inc. Through Sept. 30 it had shed 96.6 percent of its value in Canadian dollar terms, 95.6 percent in US dollar terms. The entry price in the first issue of CE is listed at USD8.56, its closing price as of Jul. 29, 2004. Yellow will have paid CAD6.74 per share/unit in dividends from August 2004 through its final distribution, to shareholders of record as of Sept. 30 on Oct. 17.

The Roundup

Canadian Edge Portfolio Conservative Holding Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF) is taking on a CAD230 million, two-stage upgrade of its Resthaven natural gas processing facility in Alberta as part of a contract it signed with Encana Corp (TSX: ECA, NYSE: ECA) to help the producer  cash in on natural gas liquids’ (NGLs) premium value within two years.

Demand for NGLs such as pentane, butane and propane has surged in step with a pick-up in oil sands activity post-Great Recession lows, as operators use them both to produce bitumen and thin the sticky resource for transportation. A barrel of pentane, also known as condensate, is trading higher than a barrel of US benchmark West Texas Intermediate, with butane and propane close behind. Encana expects to increase its liquids production to 30,000 barrels per day (bpd) from approximately 10,000 bpd through its deal with Pembina and arrangements with other midstream operators.

Pembina will build a new enhanced liquids extraction facility by modifying and expanding an existing shallow-cut gas plant. Once operational the initial phase will have gross capacity of 200 million cubic feet per day (mmcf/d) and 13,000 barrels per day (bpd) of liquids extraction capability, with ultimate capacity of 300 mmcf/d.

Pembina plans to construct a 44-kilometer, six-inch diameter NGLs pipeline to move the extracted liquids from Resthaven to its Peace Pipeline for delivery to Edmonton. Pembina will own approximately 65 percent of the completed Resthaven facility, 100 percent of the NGLs pipeline.

Management estimates that Resthaven and the NGLs pipeline will contribute annual EBITDA of CAD30 million to CAD40 million, including pipeline tolls. Subject to regulatory approval, Pembina expects the new facilities to come on line by late 2013. Pembina’s projected CAD230 million investment in Resthaven is supported by long-term firm service agreement with Encana and one other undisclosed “major area producer.” The NGLs pipeline is also underpinned by long-term firm service agreements.

Pembina also received a vote of confidence from DBRS, as the credit rater affirmed its marks on the company’s senior unsecured notes and its senior 7.38 percent secured notes at BBB (high) with “stable” trends.

DBRS cited the notes’ relatively small portion of overall debt as well as the fact that Pembina has “no intention” of issuing any new secured notes. The agency also pointed out that the ratings are “underpinned by Pembina’s relatively stable pipeline businesses…and Oil Sands & Heavy Oil (long-term contracts)…and its solid interest coverage and cash flow metrics.”

Pembina’s one-six-one buy-hold-sell line on Bay Street is more reflective of the stock’s strong run in 2011. At its Tuesday closing price of CAD25.93 on the Toronto Stock Exchange (TSX) it’s 2.7 percent above the eight-analyst-average target price of CAD25.25 and about 20 percent above where it began the year. Pembina Pipeline is a buy under USD25.

Here are announced and estimated third-quarter reporting dates for Canadian Edge Portfolio Holdings. We’ve linked to articles and analyses for companies that have already reported, a list that to this point is limited to Colabor Group Inc (TSX: GCL, OTC: COLFF), which reported solid numbers Tuesday morning.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Oct. 27 (confirmed)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Nov. 8 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Nov. 11 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Nov. 8 (estimate)
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPUF)–Nov. 9 (confirmed)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Nov. 7 (confirmed)
• Capstone Infrastructure Corp (TSX: CSE, OTC: MCQPF)–Nov. 14 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Nov. 11 (estimate)
• Colabor Inc (TSX: GCL, OTC: COLFF)–Oct. 18 Flash Alert
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Nov. 8 (confirmed)
• Extendicare REIT (TSX: EXE-U, OTC: EXETF)–Nov. 4 (estimate)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Nov. 10 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Nov. 8 (estimate)
• Just Energy Group Inc (TSX: JE, OTC: JUSTF)–Nov. 9 (estimate)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Nov. 1 (confirmed)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Nov. 8 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)–Nov. 9 (confirmed)
• Provident Energy Ltd (TSX: PVE, NYSE: PVX)–Nov. 10 (estimate)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Nov. 7 (confirmed)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Nov. 1 (confirmed)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–Oct. 27 (confirmed)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Nov. 14 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Nov. 1 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)– Nov. 10 (estimate)
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)–Nov. 3 (estimate)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Nov. 8 (estimate)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–Nov. 10 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Nov. 4 (estimate)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Nov. 11 (estimate)
• Penn West Petroleum Ltd (TSX: PWT, NYSE: PWE)–Nov. 3 (estimate)
• Perpetual Energy Inc (TSX: PMT, OTC: PMGYF)–Nov. 8 (estimate)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Nov. 9 (estimate)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–Nov. 3 (estimate)
• Student Transportation Inc (TSX: STB, OTC: STUXF)–Nov. 11 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Nov. 4 (estimate)