Much has changed since July 2004, when the first issue of Canadian Edge was published. Income trusts, which formed the entirety of the original coverage universe, are largely a thing of the past.

Of course global markets have come unglued, gotten it back together and now, depending upon which particular ticker-television talking head you’re within earshot of, are tottering on the verge of either hell or high water.

In a worst-case, the US has already blown its run as the lone global superpower, doomed to decline because of excessive debt and too-far-flung and too many foreign commitments. In a best-case, this is a period of only relative decline, where the US will remain the dominant but not single force on the global economic and political stage.

The developed economies of the West, saddled with huge public obligations to retirees and commitments to fund health care, are faced with difficult fiscal choices, all of which are likely to impose at least some drag on growth in coming years, provided, of course, European authorities hammer out a solution to the immediate threat from Greece.

Against all this stands Canada, a developed country that’s thriving in the aftermath of the worst credit/financial/economic event in 80 years. The key to the Great White North’s relative health is its diversifying away from near total dependence on the US, mainly through the export of its vast resources to developing Asia. Strong commodity prices have had a beneficial wealth effect for Canadians on the whole, despite the negative impact of the country’s manufacturing exporters.

High yields helped by advantageous taxation provided the founding hook for Canadian Edge more than seven years ago. But building wealth by buying and holding high quality businesses capable of sustaining and growing dividends has always been the primary mission.

Time Warp

If you print out the pdf version of CE, you might note that Issue No. 1 is 13 pages total. The portfolio consisted of 10 holdings, and How They Rate included 40 individual income funds, income and royalty trusts and REITs as well as three trust mutual funds.

The wry among you will certainly enjoy the irony of an “In Brief” section consuming more space than any other article in the October issue. You absolutely can read just In Brief, which regularly serves the “executive summary” role for CE, and gather all actionable advice and substantive analytical changes presented in the main body of each issue. So it is by all means a useful shortcut.

But I’ll note that “Comprehensive” and “thorough” have absolutely been causes we’ve celebrated as the issue length has grown to accommodate a portfolio comprising of 37 companies and funds and a coverage universe of 150-plus. Printing the How They Rate table today will take up at least 12 pages itself.

Developing a pretty good understanding of the original Tax Fairness Plan in the early aftermath of its Oct. 31, 2006, introduction rather than jumping to panicked conclusions helped CE readers through an extremely difficult period to realize extraordinary rebound returns. Poring over quarterly and annual reports and digesting executive conference calls gives us insight into management thinking not only about what’s transpired but what’s happening on the ground at the moment and how it impacts earnings forecasts.

Keeping up with every Portfolio Holding and much of the How They Rate coverage universe issue after issue is how we separate wheat from chaff and find businesses that are capable of building wealth over time.

From the very beginning, 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 particular 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 Portoflio, 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 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. Still a cornerstone of the CE Portfolio and a company that converted without cutting its distribution, ARC Resources is a buy under USD26.

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 is a buy under USD25.

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. It’s now a buy under USD5.

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 and is a buy under USD25.

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. Conservative Holding RioCan REIT is a buy under USD25.

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. Still under How They Rate coverage, Superior Plus is a hold.

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. Another longstanding member of the CE Portfolio, Vermilion is a buy under USD50.

Yellow Pages Income Fund converted into Yellow Media Inc. It’s now 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, which is payable to shareholders of record as of Sept. 30 on Oct. 17.