ARC Resources Ltd’s (TSX: ARX, OTC: AETUF) most recent dividend increase was announced in July 2008 for the payment to be made in August 2008. Since then the oil and gas producer reduced its monthly payout five times, to the current rate of CAD0.10 per month.

Artis REIT (TSX: AX-U, OTC: ARESF) last raised its monthly distribution in June 2008, from CAD0.0875 to the current rate of CAD0.09. The good news is the REIT has never cut its distribution.

The key to the ARC story is that management continues to boost production and add reserves in an efficient manner, generating wealth for shareholders at the wellhead and for the long term. An explicit decision has been made to maximize the share of cash flow devoted to reinvestment in the business, and that decision is paying off: ARC is now trading at its post-Global Financial Crisis/Great Recession high.

Artis, meanwhile, has posted a 16.7 percent, price-only rally on the Toronto Stock Exchange (TSX) since bottoming in September 2013 amid the fear-of-rising-interest-rate-driven selloff that afflicted yield-focused equities. There’s still headroom up to a near-term closing high of CAD17.03 established April 30, 2013, and financial and operating results certainly support a higher valuation.

In fact Artis is trading at just 0.92 times book value and 10.8 times funds from operations (FFO).

This month’s Best Buys do represent a deviation from our preference for dividend/distribution growth stories. But we are looking at growth at a reasonable cost, with the added compensation of consistent, sustainable monthly payouts.

At these levels ARC is yielding 3.9 percent, Artis 6.9 percent.

ARC’s share price is approaching levels it hasn’t seen since August 2008 after management reported expectations-beating fourth-quarter and full-year 2013 production and FFO numbers.

Production reached a company-record average of 100,883 barrels of oil equivalent per day (boe/d) for the fourth quarter, up 5.3 percent compared to the 95,725 boe/d average for the fourth quarter of 2012.

Full-year production averaged 96,087 boe/d, up 2.7 percent compared to 2012.

Higher production at Ante Creek and Parkland/Tower, along with strong performance at Pembina, contributed to the increase in 2013. ARC’s fourth quarter oil and liquids production reached a record 40,990 barrels per day, 8.8 percent higher than the fourth quarter of 2012.

Output growth combined with a 7.1 percent increase in ARC’s average realized per barrel of oil equivalent drive solid cash flow growth.

FFO reached CAD238 million, or CAD0.76 per share, for the three months ended Dec. 31, 2013, up from CAD208 million, or CAD0.68, for the prior corresponding period.

FFO for 2013 were CAD861.8 million, or CAD2.76 per share, up from CAD719.8 million, or CAD2.42 per share, in 2012.

The fourth-quarter payout ratio based on FFO per share was 39.5 percent. For the year it was 43.5 percent.

Fourth-quarter and full-year 2013 commodity sales revenue of CAD425 million and CAD1.6 billion were up 13 percent and 17 percent, respectively, compared to 2012 due to higher realized crude oil and natural gas prices.

Although crude oil and liquids production accounted for 41 percent and 39 percent of fourth-quarter and full-year production, respectively, they contributed approximately 71 percent and 73 percent of fourth-quarter and full-year sales revenue.

CEO Myron Stadnyk noted in a statement announcing the result that ARC had executed its most significant annual capital program to date.

ARC replaced approximately 200 percent of 2013 total production, adding 68.4 million barrels of oil equivalent (MMboe) of proved plus probable (2P) reserves.

ARC grew proved reserves by 3 percent during 2013 at a replacement cost of CAD18.20 per barrel of oil equivalent. The company’s three-year average proved reserve replacement cost is CAD14.95 per boe. Management is generating returns in excess of its cost of capital, offsetting production declines as demonstrated by production-per-share growth.

ARC expects 2014 average production of 110,000 to 114,000 boe/d, mainly from its northeastern British Columbia Montney formation assets, representing 14.5 percent to 18.6 percent year-over-year production growth compared to 2013.

The company’s initial capital budget for the year is CAD915 million, up from CAD874 million in 2013.

ARC commenced the initial flow of restricted volumes of oil and natural gas production through its new Parkland/Tower gas processing and liquids handling facility late in the fourth quarter of 2013. Construction of the new facility was completed ahead of schedule.

At the time of the plant’s commissioning ARC had an inventory of 26 previously drilled wells at Tower and Parkland tied into the facility and ready to be brought on stream. The existing wells will be systematically brought on production over the course of the first quarter of 2014.

ARC plans to drill additional wells at Tower and Parkland in 2014 and expects to fill the facility over the course of the next 12 to 18 months.

ARC closed the year with a strong balance sheet, including total available credit facilities of CAD2 billion with debt of CAD901.3 million drawn.  ARC had available credit of approximately CAD1 billion after a working capital deficit.

The net debt-to-2013 funds from operations ratio was 1.2 times as of Dec. 31, 2013, and net debt was approximately 10 percent of ARC’s total capitalization at the end of the fourth quarter.

ARC, one of our core energy Holdings, continues to build value for investors. And 2014 is on track to be a year of strong production growth.

Based on its strong production growth profile ARC Resources is now a buy under USD28.

Canadian real estate investment trusts (REIT) got demolished last year after former Federal Reserve Chairman Ben Bernanke introduced the term “tapering” to the investor’s lexicon and thereby signaled a coming end to this era of historically low interest rates.

But–despite what the plunge in unit prices might suggest and as demonstrated by fourth-quarter and full-year 2013 results–REITs remain in solid financial shape, with strong operating metrics. Distributions are well supported and, coming off a low base, REITs could be poised for a period of outperformance versus financial sector peers.

That’s not to say REITs’ paths are paved with gold; the end of easy money will make it more expensive to expand portfolios with the help of cheap debt and equity financing.

But improving North American economic fundamentals also imply stronger internal growth, driven by higher rents. And higher rents translate into higher FFO, the primary metric of REIT profitability.

Artis, a diversified REIT with office, industrial and retail properties in Canada and the US, with a major focus in western Canada, reported growth in FFO per unit of 12.3 percent to CAD1.46, as adjusted FFO per unit ticked up by 9.6 percent to CAD1.26.

Property net operating income (NOI) was up 23.5 percent, while same-property NOI rose 3.3 percent.

Also notable is a 7.2 percent increase weighted-average rental rates on renewals reported for the year ended Dec. 31, 2013, compared to 2012.

Occupancy for the REIT was 95.5 percent as of Dec. 31, 2013 (96.2 percent including commitments on vacant space) compared to 95.8 percent as of Sept. 30, 2013, and 95.6 percent as of Dec. 31, 2012.

The payout ratio for the year was 74 percent.

The REIT’s commercial property comprises nearly 25 million square feet of leasable area.

As of Dec. 31, 2013, actual property NOI by asset class was approximately 25.6 percent retail, 50.5 percent office and 23.9 percent industrial.

Property NOI by geographical region was approximately 9 percent in British Columbia, 38.7 percent in Alberta, 6.9 percent in Saskatchewan, 12.3 percent in Manitoba, 13.2 percent in Ontario and 19.9 percent in the US.

During 2013 Artis acquired seven Canadian and five US properties for aggregate purchase prices of CAD321.1 million and USD212.4 million, respectively, together representing a weighted-average capitalization rate of 6.4 percent.

Artis also earned an upgrade to an investment-grade credit rating from DBRS of BBB (low).

The REIT raised CAD172.5 million of equity in a public offering of units and CAD180 million in two public offerings of preferred units, providing ample liquidity to fund external as well as internal growth initiatives.

Management reduced mortgage debt-to-gross book value to 45.4 percent and total debt-to-gross book value to 49 percent and improved the interest coverage ratio to 2.82 times and decreased weighted-average mortgage interest rate to 4.27 percent.

Still a compelling value even after its strong post-September 2013 run, Artis REIT is a buy under USD16.

For more information on ARC Resources, go to How They Rate under Oil and Gas. Click here to go to ARC’s investor relations page on its company website.

Click here to go to ARC’s Yahoo! Finance page for its Toronto Stock Exchange (TSX) symbol and here for its US over-the-counter (OTC) listing. Both links include a wealth of information and data. The page for the OTC symbol includes a link to Yahoo! Finance’s very useful “Key Statistics” page, whereas the TSX symbol page does not include such a link.

Artis REIT is tracked under Real Estate Trusts. Click here to go to Artis’ investor relations page on its company website. Click here to go to its Yahoo! Finance page for its TSX listing, which includes access to the “Key Statistics” page. Here’s the link to the Yahoo! Finance page for Artis’ US OTC listing.

ARC is a good-sized company with a market capitalization of CAD9.6 billion. Artis REIT, with a market capitalization of CAD2 billion, ranks No. 4 among the five Canadian REITs in the CE Portfolio. Both ARC and Artis have plenty of liquidity on both sides of the border, both in TSX and US-listed symbols.

ARC trades on the TSX under the symbol ARX and on the US OTC market under the symbol AETUF. Artis REIT trades on the TSX under the symbol AX-U and on the US OTC market under the symbol ARESF.

ARC is covered by 20 Bay Street and Wall Street analysts. Eleven analysts rate the stock a “buy,” while eight rate it a “hold.” One analyst rates the stock a “sell.”

The average 12-month price target among the 17 analysts who provide such a figure is CAD32.22, implying upside from a CAD30.45 closing price on April 2, including an annual dividend rate of CAD1.20 per share, of 9.8 percent.

Artis REIT is covered by nine analysts, six of whom rates it a “buy,” three of whom rate it a “hold.” There are no “sell” ratings on the REIT.

The average 12-month price target among the seven analysts who provide such a figure is CAD17.04. Artis closed at CAD15.69 on April 2 on the TSX. Including a current annualized dividend rate of CAD1.08 per unit, the REIT would post a total return of 15.5 percent based on analysts’ consensus forecast.

As is the case with all stocks in the Canadian Edge coverage universe, you get the same ownership whether you buy in the US or Canada. These stocks are priced in and pay dividends in Canadian dollars. Appreciation in the loonie will raise dividends as well as the value of your shares.

Dividends paid by ARC are 100 percent qualified for US income tax purposes. Its dividends are taxed at the now-permanent Bush-era rates of 5 percent to 15 percent for investors’ first USD450,000 a year of income for couples and USD400,000 for single filers. Above that the maximum tax rate is 20 percent.

Canadian investors enjoy favorable tax status for ARC. For US investors, dividends paid into IRAs aren’t subject to 15 percent Canadian withholding tax, though they are withheld at a 15 percent rate if held outside of an IRA.

Dividend taxes withheld from US non-IRA accounts can be recovered as a credit by filing a Form 1116 with your US income taxes. The amount of recovery allowed per year depends on your own tax situation.

As for Artis REIT, the vast majority of Canadian income trusts converted into corporations in 2011, as a result of the Canadian government’s decision to close the loophole that eliminated taxation at the corporate level. With the notable exception of REITs, most other entities that opted to maintain an income trust structure would be classified as Specified Investment Flow-Through entities (SIFT) and would be taxed at the corporate level.

Distributions from a SIFT held in an IRA aren’t subject to the 15 percent withholding tax by the Canadian government. That’s because SIFTs essentially have tax parity with corporations, and therefore their distributions are considered dividends under Canadian tax law.

Distributions from REITs, by contrast, will be withheld at the 15 percent rate when US investors hold them in their IRAs or other tax-advantaged accounts.

Unfortunately, the exemption from Canada’s withholding tax of 15 percent on dividends/distributions from holdings in US investors’ tax-advantaged accounts, such as IRAs and Roth IRAs, only applies to corporations, not REITs.

Furthermore, unlike when Canadian REITs are held within a US investor’s taxable account, the amount withheld by the Canadian government from a REIT in an IRA cannot be recaptured via tax credits from the IRS.