Lightstream Resources Ltd (TSX: LTS, OTC: LSTMF) announced a 50 percent reduction in its monthly dividend rate from CAD0.08 per share to CAD0.04.

We added Lightstream, a CE Portfolio Aggressive Holding, to the Watch List in the September 2013 issue because its share-price performance had for months lagged rising prices for crude oil. This represented a significant break, as the stock of the light-oil-heavy company had for some time tracked spot crude prices quite closely.

It suggested something else at work, that investors seriously questioned Lightstream’s ability to simultaneously fund its ambitious development plan while satisfying its significant debt obligations and also maintaining a CAD0.08 per month, CAD0.96 per year dividend rate.

Management finally answered on Nov. 22, 2013, with a strategic plan, capital program and production guidance for 2014. The company’s focus will be on improving its sustainability ratio and strengthening its balance sheet by cutting debt while maintaining production at 2013 levels.

Lightstream will spend CAD525 million to CAD575 million to keep output at roughly current levels. And, as previously noted, management has reduced the dividend and has also terminated the company’s dividend reinvestment and share dividend plans.

The company’s 2014 capital plan represents a decrease of approximately 25 percent from estimated 2013 CAPEX and 42 percent from 2012 levels. The 2014 capital plan is expected to deliver an average daily production rate of 45,000 to 47,000 barrels of oil equivalent per day (boe/d) and an exit production rate of 46,000 to 48,000 boe/d.

Third-quarter production was up 17 percent year over year but was flat sequentially at 45,160 boe/d. Funds from operations (FFO) grew by 7 percent sequentially and 47 percent year over year to CAD180 million, or CAD0.91 per share. FFO exceeded net capital and cash dividends by CAD8 million.

Lightstream is also targeting CAD600 million of non-core asset sales by the end of 2015, using the proceeds to pay down debt. Of course selling producing assets, core or not, does also eat into cash flow that might otherwise be used to pay dividends.

So management is making difficult short-term choices that should pay off in the long term.

Lightstream Resources is a buy for aggressive investors but we’re reducing our buy-under target to USD8.

We’d like to give management two quarters to show meaningful progress on its initiatives, including asset sales and debt reduction. Maintaining its current production rate is another key marker.

The share price has come off the Nov. 27, 2013, post-dividend-cut-announcement closing low of CAD5.41 on the Toronto Stock Exchange, as a new set of investors and/or estranged investors absorb the implications of the dividend cut and step in for disaffected income-focused investors.

At CAD5.66 per share Lighstream has clearly not bounced yet, but I expect the analyst community will show more appreciation once the new plan is in action. TD Securities, for one, did raise the stock to “buy” from “hold” following the Nov. 22 announcement. Several others have reiterated “hold” advice, while Desjardin Securities has initiated coverage of the stock with a “hold” rating and a CAD7 price target.

TD Securities is the lone Bay Street shop with a “buy” rating. Seventeen others rate Lightstream a “hold,” though only one rates the stock a “sell.”

The average 12-month target price for Lightstream based on forecasts from 18 of the 19 analysts who cover the stock is CAD7.15. Including one more CAD0.08 dividend payment and 11 at CAD0.04, implied upside from here is approximately 35 percent.

Please note that, because of the volatile nature of commodity pricing, all Oil and Gas companies in the How They Rate coverage universe should be considered permanent members of the “other receiving votes” section of the Dividend Watch List. But we will reserve no specific place for notice for Lightstream going forward, should management show it can execute on its strategy.

Data Group Inc (TSX: DGI, OTC: DGPIF) is off the Watch List, though also not for good reasons: Management has suspended the company’s dividend as it seeks to advance the transition to digital from print to accelerate its efforts to pay down debt and repair the balance sheet.

Third-quarter revenue was down 7.5 percent to CAD74.1 million, as the legacy print business continues to shrink. Data Group posted a net loss of CAD20.2 million.

Data Group continues to push an aggressive turnaround strategy focused on generating new revenue, cutting costs and reducing debt. Its attempt to evolve into a business process outsourcing provider faces significant challenges. Hold.

Atlantic Power Corp (TSX: ATP, NYSE: AT) reported third-quarter and nine-month operating and financial results that in a vacuum were solid.

But management’s prepared remarks and answers to analysts’ questions during the company’s third-quarter conference call leave open the distinct possibility of another dividend cut announcement in early 2014.

Atlantic Power, no longer a Portfolio Holding, is now a member of the Dividend Watch List. For more on the company, see this month’s Portfolio Update. Sell.

Chorus Aviation Inc (TSX: CHR/B, OTC: CHRVF) is off the Watch List as well for good reason: The company has prevailed in its dispute with Air Canada (TSX: AC/B, OTC: AIDIF).

This means no liability and no retroactive payment to Air Canada.

CEO Joseph Randell said in a recent interview that management could revisit the dividend cut should it prevail, noting Chorus’ confidence as well as the fact that the company is “not ruling out raising the dividend.”

Third-quarter operating revenue was down 0.8 percent, though adjusted net income of CAD27.7 million, or CAD0.23 per share, represented one of the best results since the company converted to a corporation in December 2010.

The biggest issue for Chorus remains the fact that approximately 99 percent of its revenue comes from its partnership with Air Canada, which is set to expire in 2020. Efforts to diversify the business continue, though progress has been fitful. And competition is heating up.

The positive third-quarter results and the arbitration win earn Chorus an upgrade to hold.

Here’s the rest of this month’s List. Not all members are sells, though the most conservative investors should avoid the lot of them.

Barrick Gold Corp’s (TSX: ABX, NYSE: ABX) third-quarter earnings beat estimates on solid operating performance. But a new bought-deal equity financing got a cool reception on Bay Street and Wall Street.

Management has also suspended operations at the USD8.5 billion Pascua-Lima min on the Argentina-Chile border, a move that should actually help stabilize the balance sheet.

The biggest gold producer in the world reported the second-biggest quarterly loss in Canadian corporate history for the second quarter and slashed its quarterly dividend rate by 75 percent to USD0.05 per share from USD0.20.

Despite the cost reductions and the dividend cut, Barrick’s balance sheet is still weak, burdened by USD15.8 billion of debt, though only USD1.8 billion is maturing between now and the end of 2015. Sell.

Bonavista Energy Corp (TSX: BNP, OTC: BNPUF) reported a 12 percent increase in third-quarter production to 73,632 barrels of oil equivalent per day, as natural gas output rose 18 percent and natural gas liquids (NGL) output was up 14 percent.

That and higher realized prices fueled a 46 percent increase in funds from operations (FFO) to CAD120.1 million, or CAD0.61 per share. The payout ratio for the period was 34 percent, down from 37 percent for the second quarter.

And management held the dividend steady at CAD0.07 on Nov. 18. Hold.

Colabor Group Inc (TSX: GCL, OTC: COLFF) reported a 1.9 percent decline in third-quarter sales to CAD343.6 million, though management emphasized the improvement compared to the second quarter and highlighted cost savings that are part of its turnaround strategy.

The dividend rate was maintained at CAD0.06 per share. Hold.

Eagle Energy Trust’s (TSX: EGL-U, OTC: ENYTF) third-quarter production was flat sequentially but up 8 percent year over year at 3,052 boe/d. Output growth on a year-to-date basis is up 22 percent.

FFO was up 17 percent to CAD11.6 million, or CAD0.37 per share, and the payout ratio for the period was down to 41 percent versus 67 percent for the second quarter. Management reiterated its 2013 guidance.

The small producer’s fortunes remain particularly tied to ups and downs of commodity prices. Hold.

Exchange Income Corp (TSX: EIF, OTC: EIFZF) reported third-quarter earnings before interest, taxation, depreciation and amortization (EBITDA) declined by half to CAD15.6 million due to margin pressures at rapidly growing WesTower business in the US.

Overall revenue was up 21 percent to CAD267.3 million, as its manufacturing unit posted 25 percent growth.

Management maintained the company’s CAD0.14 monthly dividend rate for the payment due Dec. 15, 2013, to shareholders of record as of Nov. 29, 2013.

Exchange Income’s share price has recovered from the three-year closing low of CAD17.99 it established on Oct. 7, 2013, on the Toronto Stock Exchange (TSX) in the aftermath of its third-quarter EBITDA warning, trading at CAD22.15 as of midday Thursday, Dec. 5.

Management emphasized at the time of its warning that a dividend cut was not being considered.

Management has navigated similar challenges with other of its operating businesses, and it is addressing the current issue head-on. We added Exchange Income to the Dividend Watch List out of an abundance of caution.

Exchange Income Corp, which is yielding 7.5 percent, remains a buy up to USD22.

FP Newspapers Inc (TSX: FP, OTC: FPNUF) reported a decline in third-quarter net income to CAD900,000, or CAD0.125 per share, from CAD1 million, or CAD0.141 per share a year ago. Revenue for FP Canadian Newspapers LP, in which FP Newspapers holds a 49 percent stake, slid by 4.5 percent to CAD25.1 million.

Management once again maintained the CAD0.05 dividend rate for the November payment due Dec. 31. But the payout ratio for the period soared to 200 percent. Sell.

Freehold Royalties Ltd (TSX: FRU, OTC: FRHLF) reported a 1 percent increase in third-quarter production to 8,699 boe/d, while average realized prices were up 23 percent.

This combination drove a 39 percent increase in FFO to CAD36.4 million, or CAD0.54 per share. The payout ratio for the period came down to 78 percent from 93 percent in the second quarter.

Debt reduction efforts have been significant and successful. But there’s not much margin for error for a relatively small producer that’s dependent on commodity prices rather than production growth to drive FFO growth and dividend stability. Hold.

GMP Capital Inc (TSX: GMP, GMPXF) reported a 26.6 percent decline in third-quarter revenue to CAD42.6 million, as management noted low levels of activity in the primary and secondary securities markets.

The net loss for the period was CAD0.01 per share, and the payout ratio was once again negative. Sell.

Labrador Iron Ore Royalty Corp (TSX: LIF, OTC: LIFZF) reported a 10.9 percent rise in third-quarter royalty income to CAD35.6 million, while distributable cash was up 8.1 percent to CAD20 million, or CAD0.31 per share.

Management declared CAD0.25 per share and CAD0.125 per share regular and special dividends on Sept. 17, 2013, maintaining the payout practice established during the preceding seven quarters.

Labrador is set to make its next dividend declaration on or about Dec. 9, 2013, and it looks as though the current policy will prevail.

The ultimate fate of the dividend is tied to what happens with the facility that generates Labrador’s cash flow. But if it sells itself all questions are answered. Hold.

New Flyer Industries Inc (TSX: NFI, OTC: NFYED) reported a 48.2 percent increase in third-quarter revenue to USD309 million, as bus deliveries grew by 49.5 percent to 577 equivalent units. Free cash flow surged by 121.8 percent to CAD13.1 million.

Backlog continued to expand, and management noted continuing signs of recovery in its markets. Another quarter along these lines and New Flyer will transport its way off the Watch List. Hold.

Northland Power Inc (TSX: NPI, OTC: NPIFF) reported third-quarter adjusted EBITDA of CAD75.7 million, a 101 percent increase attributable to new contributions from the North Battleford and ground-mounted solar facilities.

And S&P boosts the company’s rating to BBB from BBB-.

Management has conceded that the dividend won’t be covered by free cash flow until 2014., though it maintained the current rate. Hold.

Parallel Energy Trust (TSX: PLT-U, OTC: PEYTF) reported a 22.5 percent increase in third-quarter production on a year-over-year basis but a 4.8 percent sequential decline to 7,100 boe/d. Funds from operations were off by 4.4 percent compared to the second quarter but up 27.9 percent year over to CAD10.8 million, or CAD0.20 per share. The payout ratio crept up to 74 percent from 70 percent in the second quarter.

This small producer already has one dividend cut under its belt. And the sequential negatives are a little alarming. Hold.

Precious Metals & Mining Trust’s (TSX: MMP-U, OTC: PMMTF) manager, Sentry Investments Inc, announced on June 27, 2013, that Precious Metals & Mining’s monthly cash distribution “will be changed” from CAD0.07 per unit to CAD0.035 per unit.

This 50 percent cut became effective with the Aug. 15, 2013, payment to unitholders of record on July 31, 2013, and will remain at this level until further guidance is provided by Sentry.

The Sentry board made the move “given the current environment for gold mining equities,” which comprise the bulk of Precious Metals & Mining’s portfolio.

The price of bullion increased more than five-fold from 2003 to 2011. But major gold mining companies generated little to no free cash flow. And they’re likely to generate negative free cash over the next several years. Sell.

Ten Peaks Coffee Company Inc (TSX: TPK, OTC: SWSSF) reported a 5.5 percent slide in third-quarter sales, but gross profit was up 17.6 percent to CAD1.4 million and EBITDA more than doubled to CAD1.1 million as new business and market-share gains drove volume growth despite lower prices.

Coffee is still a tough, volatile business, and it’s a hard model on which to base a dividend-paying business. Hold.

Zargon Oil & Gas Ltd (TSX: ZAR, OTC: ZARFF) reported a 2 percent sequential increase in third-quarter production to 7,560 boe/d, as natural gas output rose 11 percent compared to the second quarter.

Funds from operations were up 3 percent to CAD16.5 million, or CAD0.55 per share.

The small oil and gas producer remains highly susceptible to fluctuating commodity prices, though management maintained the CAD0.06 monthly dividend rate for payments in November, December and January. Hold.