Editor’s Note: The following article details an important subscription update. Canadian Edge is changing its name to Income Millionaire. You’ll receive full access to this new site beginning Wednesday, May 24th. Your access to the Canadian Edge website will continue for three more months. Here’s Ari Charney with more details.

One of the frustrations of running a niche publication such as Canadian Edge is that we can’t share some of our best ideas with you if they don’t fit the theme of the newsletter.

As income-investing specialists, we spend all our time searching the world for income plays across sectors, markets, and asset classes that offer the right combination of yield, value, and safety. But if it’s not a Canadian company, then you don’t get to hear about it.

We understand that’s equally frustrating for you. After all, Canadian stocks are just one slice of your portfolio. We know that you also invest in U.S. utilities, high-yielding MLPs, and fixed-income securities, among others. Some of you even use options to generate income.

As you may know, we already cover these areas in our other newsletters. But if you only subscribe to Canadian Edge, then you’ve been missing out on all these great recommendations.

Well, that ends today. Our publisher is finally allowing us to expand our mandate to include every type of income investment under the sun. Our hunt for yield is no longer beholden to arbitrary parameters such as a company’s domicile—we can go anywhere!

Naturally, a bold new mandate requires a bold new name. And Income Millionaire perfectly captures our aspiration for our portfolio—and yours.

To start, Income Millionaire includes a couple of our favorite Canadian Edge holdings, along with a broadly diversified portfolio of high-yielding MLPs, REITs, and closed-end funds. And that’s just the beginning! Over time, we’ll find more great income plays with strong fundamentals and attractive yields at just the right price.

Although we’re inaugurating Income Millionaire with a shiny new website (you’ll receive an email with login details tomorrow), you’ll still have access to the old Canadian Edge website for the next three months.  

Plus, if your account is using our auto-renew feature, rest assured that we’ll maintain your current pricing. That means you won’t need to pay the higher subscription rate we’re planning to charge any new Income Millionaire subscribers.

If you have any questions regarding the former Canadian Edge holdings during this period, then please feel free to post a question to Stock Talk at our old website. Beyond that, we’ll continue to track our other core Canadian Edge holdings for eventual inclusion in the Income Millionaire portfolio.

The Long Goodbye

Although this isn’t really goodbye, this will be our last opportunity to provide formal advice for our holdings under the Canadian Edge banner. As such, below we’ve offered our take on each of the 26 stocks that remain in the Income Portfolio.

Happily, many of the stocks in Canadian Edge’s Income Portfolio are solid, blue-chip names, with stable earnings, strong balance sheets, and well-supported dividends.

Nevertheless, we’ve divided Canadian Edge’s holdings into three risk categories to help you decide whether to continue holding in the absence of ongoing advice: the Expanded Core, the Contenders, and the Also-Rans.

The Expanded Core

In the May issue of Canadian Edge, we identified five stocks as our core holdings. These are fundamentally superior companies with attractive yields that are worth holding through thick and thin.  

But there are a number of other holdings that didn’t make the top five, even though they’re certainly suitable as core holdings. So we’re including them in this category as well.

BCE Inc. (TSX: BCE, NYSE: BCE) is our favorite among Canada’s telecom triumvirate. Although projected earnings and dividend growth are lower than that of faster-growing peers such as Telus, BCE carries significantly lower leverage, while operating a more diversified business. In a rapidly evolving communications landscape, we want a company that can pull as many levers as possible to maintain or expand its market share.

BCE’s earnings per share are forecast to grow 5% annually for the foreseeable future, which should drive dividend growth of 5% annually over the same period. With a yield of 4.8%, BCE remains a buy below C$72, or US$53.

Brookfield Infrastructure Partners LP (TSX: BIP-U, NYSE: BIP) is an incredibly shrewd investor that knows how to take advantage of market dislocations around the world.

Brookfield’s globally diversified portfolio consists of high-quality regulated and contracted assets across the utilities, transportation, energy, and communications sectors. The stable cash flows generated by these assets support the partnership’s targeted long-term distribution growth trajectory of 5% to 9% annually. With a forward yield of 4.3%, Brookfield is a buy below C$54, or US$40.

Canadian National Railway Co. (TSX: CNR, NYSE: CNI) is one of North America’s best-in-class railroad operators.

To contend with the commodities crash, management aggressively cut costs over the past two years, and now the company is leveraged to the turnaround. Indeed, freight volumes are starting to rebound, which could drive stronger-than-expected earnings growth this year.

As a high-quality company, Canadian National typically commands a premium relative to its peers. With a forward yield of 1.6%, Canadian National is a buy below C$91, or US$68.

Fortis Inc. (TSX: FTS, NYSE: FTS) is the largest investor-owned utility in Canada, but it generates a majority of its operating income from its regulated utility operations in the U.S.

With last year’s acquisition of the U.S. transmission company ITC Holdings Corp., Fortis now owns one of the most valuable pieces of 21^st century U.S. utility infrastructure. Earnings per share are forecast to grow 5% annually over the next five years, which should drive dividend growth of 6% annually over the same period. With a yield of 3.7%, Fortis is a buy below C$45, or US$34.

Compared to TransCanada, Inter Pipeline Ltd. (TSX: IPL, OTC: IPPLF) is more conservatively levered and its shares have a higher yield.

The midstream player also has good timing: It completed a major expansion just prior to the energy crash, which means it didn’t have to scramble for funding like so many of its peers. However, with capital spending reverting to lower levels, there aren’t any big near-term catalysts for earnings and dividend growth, which are expected to be muted compared to its peers.

Management is considering investing $3.1 billion in a petrochemicals complex, which could be a shrewd move given that industry’s resurgence. But this also entails considerable execution risk and greater exposure to commodities prices. With a yield of 6.0%, Inter Pipeline is a buy below C$31, or US$23.

NorthWest Healthcare Properties REIT (TSX: NWH-U, OTC: NWHUF) may still be technically in turnaround mode following its 2015 consolidation, but growth in funds from operations per unit looks to average a steady 5% annually over the next two years. That should comfortably support the REIT’s monthly distribution, which yields an attractive 7.6%.

Meanwhile, NorthWest is further diversifying its holdings globally in an industry that enjoys a strong secular tailwind from the world’s aging population. Our main concern is leverage, which is high even for a REIT, though the balance sheet is improving. This is among the riskier of our core holdings, but given its high yield, we think the risks and rewards are well balanced. NorthWest is a buy below C$14, or US$10.

Suncor Energy Inc. (TSX: SU, NYSE: SU) has C$3.6 billion in cash on its balance sheet and is one of the lowest-cost operators in the oil sands.

During a recent earnings call, CEO Steven Williams noted that the company can sustain both its dividend and its existing infrastructure even if oil were to trade at $40 per barrel for a protracted period. That means anything above that threshold is gravy. With a forward yield of 2.9%, Suncor is a buy below C$44, or US$33.

Although we favor BCE over Telus Corp. (TSX: T, NYSE: TU), we still like the latter a lot. And unlike BCE, Telus derives a slight majority of earnings from its wireless operations, which gives it a stronger earnings and dividend growth trajectory.

However, telecom is a capital-intensive industry, and Telus is a heavy borrower. Meanwhile, free cash flow has been on the decline, slipping back into the red over the past two quarters.

Fortunately, Telus is finally past the peak of its multi-year capital program, and free cash flow generation is expected to rebound strongly this year, which should enable it to comfortably manage its obligations. With a forward yield of 4.3%, Telus is a buy below C$51, or US$38.

TransCanada Corp. (TSX: TRP, NYSE: TRP) owns one of North America’s largest natural gas pipeline networks, which extends nearly 57,000 miles. And its crude-oil pipelines transport one-fifth of Canada’s oil exports to the U.S.

Beyond that, TransCanada has about C$22.5 billion in near-term growth projects that will commence operations over the next few years.

Management says these projects support dividend growth toward the upper end of its target range of 8% to 10% annually through 2020. With a forward yield of 4.0%, TransCanada is a buy below C$63, or US$47.

The Contenders

Many of the names in this category either face elevated risk due to the business cycle or operate in more competitive industries than the companies in the Expanded Core. In general, these firms possess a number of decent attributes, but bear closer watching if you decide to continue holding them.

The Home Capital debacle has shown that even Canada’s vaunted financial sector could face systemic risks if the housing bubble bursts. Thus far, the Big Six have worked together with policymakers to stem the contagion.

But the crisis seems to have, at least temporarily, impinged upon funding, which, in turn, has dampened demand from homebuyers.

With home prices in Canada’s two biggest markets at dizzying heights, we’d hate to be stuck holding financials if the country’s housing market suffers a hard landing. After all, a protracted downturn in the sector would more than offset financials’ moderately attractive yields.

First, the financials:

While Toronto-Dominion Bank (TSX: TD, NYSE: TD) has one of the smaller exposures to residential real estate among its peers, residential mortgages plus home-equity loans still accounted for a substantial 43.2% of its total loan book.

Even after its recent decline in share price, TD still trades just 10.6% below its all-time high. So it’s not a bad time to consider taking some money off the table. Otherwise, TD is a buy below C$66, or US$49.

CI Financial Corp. (TSX: CIX, OTC: CIFAF) is finally recovering from last year’s earnings slump thanks to improving fund performance and growing assets. During the first quarter, average assets under management grew 11% year over year, to C$119.4 billion, which helped drive 11% growth in adjusted earnings per share, to C$0.51.

Obviously, we believe in active asset management. But robo-advisors, ETFs, and other low-cost forms of passive investing are a serious secular headwind for this industry. The firm is diversifying into ETFs, but this transition is still in its early stages. With a yield of 5.1%, CI is a buy below C$29, or US$22.

Manulife Financial Corp.’s (TSX: MFC, NYSE: MFC) expanding footprint in Asia should give the insurer a long-term growth kicker. The company’s burgeoning asset management business, which recently cleared the C$1 trillion threshold for the first time, is another bright spot.

While Manulife has made great strides toward de-risking its business, it still has greater exposure to the vicissitudes of the capital markets than its Canadian peers. Manulife’s share price is near a post-Global Financial Crisis high, though it remains well below its all-time high. Manulife is a buy below C$25, or US$19.

Although Power Corporation of Canada (TSX: POW, OTC: PWCDF) has investments in a number of areas, the family-run holding company derives the vast majority of profits from its controlling stakes in the publicly listed firms Great-West Lifeco and IGM Financial.

Because of its structure, Power Corp. has traded at a persistent discount to the underlying value of its assets. However, when the next generation takes the helm, it could find a way to unlock greater shareholder value. With a forward yield of 4.9%, Power Corp. is a buy below C$34, or US$25.

Sun Life Financial Inc.’s (TSX: SLF, NYSE: SLF) shares have declined in recent weeks following its second consecutive quarterly earnings miss. However, as one of Canada’s three biggest life insurers, Sun Life should benefit from secular tailwinds, including the wave of baby boomer retirements and longer life expectancies.

Despite near-term hiccups, Sun Life is expected to grow earnings per share by 6% annually over the next three years, with corresponding growth in its dividend. With a forward yield of 3.9%, Sun Life is a buy below C$50, or US$37.

Now, the non-financials:

A&W Revenue Royalties Income Fund (TSX: AW-U, OTC: AWRRF) earns royalties by licensing its trademarks to Canada’s second-largest fast-food chain. However, its income is still dependent on the chain’s ability to grow sales in what will continue to be a hyper-competitive market, with numerous entrants and evolving consumer tastes.

Fortunately, the fund has low debt and solid coverage of its payout. With a yield of 4.3%, A&W remains a buy below C$37, or US$28.

In contrast to some of our stodgier stocks, CAE Inc. (TSX: CAE; NYSE: CAE), a global leader in flight-simulation training and technology, has a double-digit earnings growth trajectory, though the pace of dividend growth is slowing.

Over the long term, CAE has suffered a fair amount of earnings volatility. More recently, however, the company has achieved a solid record of earnings beats, with upside surprises in seven of the past eight quarters. Of course, CAE is subject to the health of the commercial airline sector, but that could be partly offset if military spending rises. With a yield of 1.5%, CAE is a buy below C$19, or US$14.

Although Amazon is hoping to disrupt the grocery industry just as it has seemingly every other retailer, the Internet giant’s efforts over the past decade continue to come up short. That’s good news for Choice Properties REIT (TSX: CHP-U, OTC: PPRQF), which primarily serves as the landlord to Canada’s top supermarket owner, Loblaw.

Still, grocers’ margins are razor thin (Loblaw’s profit margin averages around 2.25%). So if Amazon finally cracks the code and enters the Canadian market, then that could prove to be a punishing experience for both Loblaw and its landlord. But that’s likely still years away from happening.

In the near term, Choice’s properties have a very high occupancy rate, which supports solid, if unspectacular, growth in funds from operations and distributions per unit. Choice is a buy below C$14, or US$11.

Cineplex Inc. (TSX: CGX, OTC: CPXGF) has an absolutely commanding share of the Canadian movie-theater market.

In the near term, the company’s performance is subject to Hollywood’s ability to produce more blockbusters. Longer term, we’re concerned about shifting consumer habits in light of all the entertainment options at home, not to mention on phones. Fortunately, Cineplex is finding new ways to wring more money from customers via premium offerings, as well as by diversifying into more experiential modes of entertainment, particularly gaming.

Despite its recent decline, the stock still trades near its all-time high. With a yield of 3.2%, Cineplex is a buy below C$51, or US$38.

As construction equipment giant Caterpillar’s largest global dealer, Finning International Inc. (TSX: FTT, OTC: FINGF) saw earnings plummet during the commodities crash, as the resource sector slashed spending. But with the energy sector in recovery mode, Finning is enjoying a dramatic rebound in earnings.

Of course, we’ll feel better once sales start growing again, and that should happen later this year. Fortunately, this extremely disciplined operator can still grind out earnings growth even amid declining sales. However, dividend growth is unlikely to resume anytime soon. With a yield of 2.8%, Finning is a buy below C$26, or US$20.

Like Loblaw, North West Company (TSE: NWC, OTC: NWTUF) should be able to endure the so-called death of retail. The company’s grocery and discount stores primarily operate in small markets situated in remote areas. In other words, places that aren’t a priority for would-be usurpers.

North West has minimal debt and strong projected earnings growth through 2019. Although its stock has an attractive yield, the dividend is only expected to grow around 3% annually. North West is a buy below C$31, or US$23.

Since hitting a trailing-year high in early April, ShawCor Ltd.’s (TSX: SCL, OTC: SAWLF) shares have suffered a steep decline for reasons that we can’t fully ascertain. However, the pipeline coating and repair specialist is leveraged to the rebound in energy commodities, and we expect its earnings to continue recovering from last year’s trough.

The company survived the sector’s downturn by slashing debt and being a disciplined cost-cutter. And now it’s back to comfortably covering its dividend. With a yield of 1.8%, ShawCor is a buy below C$36, or US$27.

Thomson Reuters Corp.’s (TSX: TRI, NYSE: TRI) strategic shift toward higher-margin businesses finally bore fruit during the first quarter. And with major pension and severance expenses now out of the way, management anticipates a return to stronger free-cash-flow generation.

Thomson not only has a more streamlined business that’s leveraged to growth from its most profitable products, the vast majority of its revenue is now recurring—around 90%. That not only provides business stability, it also gives investors a fair amount of earnings visibility. With a yield of 3.2%, Thomson Reuters is a buy below C$56, or US$42.

TMX Group Ltd. (TSX: X, OTC: TMXXF) suffered a sharp decline after first-quarter earnings fell short of analyst estimates despite growing 11.0% year over year. As the owner of the Toronto Stock Exchange, TMX is subject to the ebbs and flows of the capital markets.

Meanwhile, TMX is in the midst of a strategic turnaround, with a focus on generating sustained bottom-line growth this year. In the near term, growth is expected to moderate. Longer term, we wouldn’t be surprised to see TMX swept up in the consolidation that’s happening among its peers. With a forward yield of 2.7%, TMX is a buy below C$69, or US$52.

The Also-Rans

The stocks in this category are turnaround plays that have yet to come to fruition and, therefore, would require constant monitoring, or are companies that operate in industries with significant secular tailwinds, such as retail.

If you don’t plan to monitor them closely, then you should consider selling them on any near-term rallies.

The first quarter offered evidence that AirBoss of America Corp.’s (TSX: BOS, OTC: ABSSF) turnaround could be gathering momentum, even though both sales and earnings declined. The rubber compounder and manufacturer completed its internal reorganization, boosted its dividend, and improved its balance sheet.

However, three of the four analysts who track the stock forecast that earnings will decline for the second consecutive year. Thereafter, analysts expect a strong earnings recovery. But the ride along the way could be bumpy for a stock whose yield doesn’t offer much for income investors anyway. If you’re inclined to wait for the turnaround, then you’ll have to watch this stock closely. With a yield of 2.2%, AirBoss is a buy below C$16, or US$12.

K-Bro Linen Inc. (TSX: KBL, OTC: KBRLF) is projected to a see a strong earnings rebound next year, after the company completes its major capital projects. In the near term, however, analysts expect this to be the third consecutive year in which earnings decline.

Fortunately, K-Bro has low leverage and a manageable payout ratio. On the other hand, the company has missed earnings estimates by a significant margin in seven of the past eight quarters. So the path to its earnings recovery will likely continue to be rocky. If you’re willing to hang on despite this situation, then K-Bro is a buy below C$46, or US$35.

We love that RioCan REIT’s (TSX: REI-U, OTC: RIOCF) CEO Edward Sonshine understands the sanctity of the firm’s payout. That counts for a lot.

At the same time, we’re concerned that this retail-oriented REIT, which is trying to pare leverage while restoring its occupancy rate to pre-Target levels, won’t be able to adapt quickly enough to the darkening retail landscape.

Of course, online commerce has yet to become as disruptive to bricks-and-mortar retailers in Canada as it is in the U.S. But that day is coming. And it could be coming faster than RioCan is able to diversify its holdings into offices and residential properties. If you’re comfortable with this risk, then RioCan remains a buy below C$28, or US$21.