Companies that build value as businesses always build wealth for their shareholders over time. Stocks of those that fail to do so may occasionally have a day in the sun. But sooner or later they’ll wilt, as it becomes apparent there’s no long-lasting life in the business.

When we choose stocks for the Canadian Edge Portfolio, we’re not just shopping for a high yield, or even for a dividend that seems well covered by profits now. We do want that. But equally important, the underlying business has to have a clear path to growth for revenue, cash flow and dividends.

Our Conservative Holdings’ road to growth is generally not dependent on commodity prices and is therefore usually steadier. Our Aggressive Holdings are tapped into the natural resource markets that Canada is best known for, and as such they tend to be more volatile. But if we’re right on the big trends, ultimately they’ll be more profitable as well.

Earnings reporting season is the best time to get a read on companies’ financial and operating strength. This week one Conservative Holding and one Aggressive Holding reported, and the news for both was quite encouraging, particularly at a time when so many seem willing to believe negative opinion about almost any company.

Conservative Holding AltaGas Ltd (TSX: ALA, OTC: ATGFF) came in with a predictably solid quarter, with funds from operations covering distributions by roughly a 4-to-3 margin. Coupled with a projected CAD1.8 billion in new fee-generating assets expected to be added by the end of 2012, AltaGas should meet guidance for the year and management will likely be able to announce another solid dividend increase, probably in November.

The biggest of these expansions is the projected close of the company’s merger with SEMCO Energy on Aug. 30, which will add gas distribution and midstream energy assets in the US. The deal is expected to immediately boost AltaGas’ cash flows by more than 10 percent, even as it further reduces the company’s overall dependence on volatile commodity prices.

Coupled with use of hedges on purchased and sold commodities, AltaGas’ growth of fee-generating assets has already reduced the percentage of cash flow affected by energy prices to less than 5 percent. This share is likely to keep dropping as management completes the Harmattan energy midstream project in time for winter heating season.

AltaGas’ normalized net income–which excludes one-time items–grew 12 percent for the first six months of the year from last year’s levels. That’s a pattern for 10 percent-plus annual returns–dividends plus growth–set to continue for this low-risk Conservative Holding. Buy AltaGas up to USD32 if you haven’t yet.

Aggressive Holding Noranda Income Fund (TSX: NIF-U, OTC: NNDIF) still hasn’t moved on its monthly dividend, which is at CAD0.04167 per share, or half the prevailing rate at the time of its initial public offering (IPO). Our basis for buying the stock last December was that dissident shareholders would succeed in forcing management to raise the payout closer to the IPO level, handing us a hefty gain in the stock.

That hasn’t happened yet. But solid second-quarter earnings and commensurate debt reduction certainly improve the odds that it eventually will come to pass.

Distribution coverage by distributable cash flow came in at nearly 3-to-1, even as debt was reduced to CAD91.9 million and the company continued to build cash reserves. Management is ostensibly increasing the latter as a safeguard that it will have the funds to cover its share of costs to close the zinc refinery that contributes all of its income.

That now seems unlikely, given the facility’s dominant position in eastern North America and the support of the local community. But it is owned and operated by a unit of mining giant Xstrata Plc (London: XTA, OTC: XSRAF, ADR: XSRAY), which itself is a takeover target of its major shareholder Glencore International Plc (London: GLEN, OTC: GLCNF, ADR: GLNCY). Xstrata is also the major supplier of raw materials for the plant.

Unfortunately the battle over the dividend isn’t likely to be resolved anytime soon, particularly given the muddled outlook for the world economy. Noranda’s cash flow from the refinery, for example, depends on price and demand for zinc as well as copper and sulfuric acid.

But this is also the second consecutive solid round of results we’ve seen since we added Noranda to the Portfolio. And with a yield that’s still nearly 10 percent, this stock is certainly rewarding us for hanging onto it as we wait for an even bigger payoff.

That’s apparently what some investors have concluded, given the run-up in the stock this week following the earnings announcement. Noranda remains a buy up to USD6 for aggressive investors who don’t already own it.

Aggressive Holding Ag Growth International Inc (TSX: AFN, OTC: AGGZF) won’t report second-quarter results until Aug. 15. But the stock has sold off in July, falling from a monthly closing peak of CAD38.53 on the Toronto Stock Exchange (TSX) on Jul. 4 to a low of CAD31 on Jul. 25. The stock is up CAD0.30 today, as of this writing, on its home exchange.

The basic explanation for this decline is that the US Dept of Agriculture has drastically reduced its corn crop forecast for 2012-13 due to the historic drought in the Midwest. Lower corn yields lead to lower turnover of grain augur equipment because of reduced use. We’ll have more on what this means for Ag Growth after it reports earnings on Aug. 15.

In the meantime, Ag Growth International, which is yielding 7.7 percent at these levels, remains a buy for aggressive investors who don’t already own it up to USD45.

On a final note, as we wait for the rest of the Canadian Edge Portfolio recommendations to report, it’s important not to succumb to the momentum investing mentality so many dividend investors seem to have unfortunately bought into.

Our goal here is to buy and hold value–companies that will build our wealth from a combination of generous and growing dividends and capital gains.

Sometimes a rising or falling stock can reflect a change in an underlying company’s business value. In a market where so many are so fearful, however, even something as trivial as an opinion can trigger massive selling.

That’s certainly what happened Thursday to shares of Student Transportation Inc (TSX: STB, NSDQ: STB), as a well-publicized opinion piece set off  a selling wave by inferring the stock was worth no more than CAD2. Much of the downside was quickly erased when people realized the trigger.

But no doubt some have been spooked out of a stock that’s still perfectly solid on the known numbers. And we’ve seen the same thing happen to shares of IBI Group Inc (TSX: IBG, OTV: IBIBF) and Just Energy Group Inc (TSX: JE, NYSE: JE) in recent days as well.

Clearly, no companies are wholly immune from potential stumbles. That’s why you never chase a rising stock or double down on a falling one. But as we’ve seen time and again in the post-2008-09 crash world, false alarms are far, far more common than actual company meltdowns. And so long as companies do hold together as businesses, their stocks will recover any near-term damage.

I can almost guarantee you that not every CE Portfolio stock is going to be a winner. But the way we protect ourselves from the losers is by balancing and diversifying our holdings, not by running for the exits whenever someone–who may well be acting from self-interest–shouts “fire.” We do sell when a company’s underlying business really is weakening on the numbers, but not on rumor and innuendo.

Expect your next Flash Alert on Friday, Aug. 3, highlighting the vital numbers for CE Portfolio companies reporting between now and then. I’ll have an in-depth review in the August issue, which will be published Aug. 10, of Portfolio picks as well as for non-Portfolio companies tracked in How They Rate.

Here are dates for the next release of quarterly numbers, with links to analysis of results for companies that have reported.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Jul. 26 Flash Alert
• Artis REIT (TSX: AX-U, OTC: ARESF)–Aug. 8 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Aug. 8 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Aug. 13 (estimate)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPUF)–Aug. 8 (confirmed)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Aug. 8 (confirmed)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Aug. 9 (confirmed)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Aug. 8 (confirmed)
• Dundee REIT (TSX: D-U, OTC: DRETF)–Aug. 8 (confirmed)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Aug. 8 (estimate)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Aug. 8 (confirmed)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Aug. 7 (confirmed)
• Just Energy Group Inc (TSX: JE, OTC: JUSTF)–Aug. 10 (estimate)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Aug. 8 (confirmed)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Aug. 14 (confirmed)
• Pembina Pipeline Corp (TSX: PPL, NYSE: PBA)–Aug. 9 (confirmed)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Aug. 10 (confirmed)
• Shaw Communications Inc (TSX: SJR/B, NYSE: SJR)–Jun. 28 (confirmed)
• Student Transportation Inc (TSX: STB, OTC: STUXF)–Sept. 21 (estimate)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Jul. 27 (confirmed)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–Jul. 31 (confirmed)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Aug. 15 (confirmed)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Aug. 3 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Aug. 8 (confirmed)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–Jul. 20 Flash Alert
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–Aug. 10 (estimate)
• Extendicare REIT (TSX: EXE-U, OTC: EXETF)–Aug. 9 (confirmed)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Aug. 2 (confirmed)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–Jul. 26 Flash Alert
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Aug. 3 (estimate)
• Pengrowth Energy Corp (TSX: PGF, NYSE: PGH)–Aug. 10 (confirmed)
• PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF)–Aug. 8 (estimate)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Aug. 10 (estimate)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–Aug. 3 (estimate)
• Vermilion Energy Inc (TSX: VET, OTC: VEMTF)–Aug. 2 (confirmed)