Business growth is the key to sustainable and rising dividends over the long haul.

That’s why the most important company news in between earnings reports always concerns strategic moves to boost long-term profitability.

Several Canadian Edge Portfolio companies reported significant news on this front last month. Cineplex Inc (TSX: CGX, OTC: CPXGF) reported it will buy four theaters owned by AMC Entertainment, three in Ontario and one in Montreal, Quebec.

The purchase price is “nominal.” The key cost in the deal will involve upgrading the facilities for the company’s signature digital projection technology.

In recent years Cineplex has grown its franchise mainly by improving its range of entertainment offerings around existing facilities. That’s been enough to sustain earnings and dividend growth, even when movie fare has been lackluster.

This deal potentially marks a new chapter for the company as it expands its reach in key markets, further leveraging its successful growth in interactive, media and alternative programming.

Last month I raised the buy target for Cineplex to USD28, on the strength of sound first-quarter growth and a 4.7 percent dividend increase. This month I’m bumping it up again, to USD30, on this strategic move and the promise of more such efforts to come. Cineplex is a buy up to USD30.

AltaGas Ltd (TSX: ALA, OTC: ATGFF) announced two major strategic advances last month. The company acquired a 50 percent interest in privately held Quatro Resources Inc’s midstream assets, including an 87 percent interest in the Gilby Gas Plant, for CAD20 million.

The assets produce fee-based revenue from processing natural gas liquids (NGL) in one of Canada’s most prolific regions. And they have considerable opportunity for expansion, including a 70 kilometer extension of a pipeline connecting an ethane extraction plant.

Management also announced it’s on track to complete the acquisition of SEMCO Holding Corp in the third quarter, which will add gas utility as well as fee-earning midstream assets in Michigan and Alaska.

And the company affirmed it had previously locked in prices for 80 percent for the 11 percent of its NGLs output that it sells on the spot market, virtually eliminating any exposure to volatile NGLs prices this year.

AltaGas’ third operating segment–electric power generation–also took a step forward last month, as it won regulators’ approval to build a 66 megawatt hydro power facility in British Columbia. Power from the facility will be sold under a long-term contract with provincial entities. And it complements other projects in the region that are proceeding on time and budget.

Like Cineplex, AltaGas continues to execute on strategic moves to enhance long-term growth.

I expect another dividend increase for the December payment. Until then AltaGas is a buy up to USD32.

Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPFF) will buy four hydroelectric generating stations from a unit of Alcoa Inc (NYSE: AA), adding 378 megawatts of capacity to its fleet.

All sales are locked up to the Tennessee Valley Authority until June 2014, at which time the company will be able to shop the low-cost, clean energy around to a range of eager buyers.

I suspect management will look for the kind of long-term deal that characterizes the bulk of its current fleet. Meanwhile, financial exposure to the deal has been controlled by an arrangement with parent Brookfield Asset Management Inc (TSX: BAM/A, NYSE: BAM), under which Brookfield Renewable will only take on immediate obligations for 25 percent of the output.

The parent can then drop down the balance over time, limiting exposure to sometimes volatile credit market conditions. That’s a luxury Brookfield Renewable’s rivals don’t share, and it’s kept the price of the LP’s stock the most level of the former income trusts in the Electric Power sector.

Still set to list on the New York Stock Exchange (NYSE) in the second half of 2012, Brookfield Renewable is a buy up to USD27.

Those in search of more deep value in the electric sector have a chance to buy Atlantic Power Corp (TSX: ATP, NYSE: AT) on the cheap.

The company got a cold response from investors as it issued 5.6 million shares of common stock (USD68.5 million) and a CAD130 million, seven-year convertible debt obligation at an interest rate of 5.75 percent. That extended the slow drip of a decline that began earlier this year with the stock trading over USD15.

The funds will be used to help permanently finance the purchase and construction of a 300 megawatt wind power plant in Oklahoma, under a 20-year contract with local utility OGE Energy Corp (NYSE: OGE).

Unfortunately, the moves only reinforced investor and analyst bearishness on the company in the face of a weak wholesale power market, despite the fact that the vast majority of output for the next several years will be sold under long-term contracts.

The price movement in Atlantic is very typical of the kind of momentum high-yielding stocks have gotten caught up in over the past several years, sometimes sending prices sharply higher and other times lower.

The key is the company is still making strategic moves to fund future dividend growth. And that’s what’s needed to keep Atlantic Power a buy up to USD16.

Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF), by contrast, is still trading slightly above the buy target of USD10 I’ve had for some time. I’m still inclined to keep the target there until there’s a dividend increase.

But the company continues to execute on its strategic plans for growth by adding new cash-generating hydro and wind power assets.

Last month Innergex reached a deal with Capital Power Corp (TSX: CPX, OTC: CPXWF) to acquire the Brown Lake and Miller Creek hydro facilities for CAD69.2 million. All the power from the facilities is locked up under a contract with BC Hydro that expires in 2023, and the company plans to spend an additional CAD8.5 million to improve output and efficiency at the facility.

Innergex’ long-run plans call for dramatically raising output from a wealth of potential hydro projects over the next several years. That’s likely to keep dividend growth on hold for the time being.

But Innergex is certainly a buy on any dip under USD10. And the more strategic growth it’s able to complete, the more likely I’ll raise the buy target without one down the road.

Keyera Corp (TSX: KEY, OTC: KEYUF) has decided to go ahead with the development and construction of the South Cheecham rail and truck terminal, designed to transport bitumen from the fast-growing Athabasca Oil Sands area.

That will work hand-in-glove with plans to construct pipeline connections between producers and processors throughout the area, adding more fee-based income starting in 2013.

Keyera’s unit price is well off the highs in the lower 50s where it began the year. But in my view that high was due to momentum buyers, just as the drop since has been due to momentum selling.

This is a company in the pink of health, as it continues to prove by posting strong earnings, and it’s on track for another dividend increase with the December payment. Keyera remains a strong buy up to USD42 for those who don’t already own it.

The same applies for Pembina Pipeline Corp (TSX: PPL, NYSE: PBA), which has been on a similar roller-coaster ride this year presumably due to investor fears about exposure to the recent drop in prices for some NGLs.

The recent wave of insider buying should set any concerns to rest that there’s any threat to company plans to boost dividends 3 percent to 5 percent a year going forward.

We may not see any market recognition of the company’s strength until earnings are announced in early August. But Pembina Pipeline is a strong buy up to USD30 for those who don’t already own it.

Dealing with Volatility

So long as a company is growing its business, any setback in the stock market will be short lived. And we’ll get a full rundown on how Canadian Edge Portfolio companies are doing when they report earnings on the dates below.

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Jul. 27 (estimate)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Aug. 8 (confirmed)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Aug. 13 (estimate)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Aug. 13 (estimate)
• Brookfield Renewable Energy Partners LP (TSX: BEP-U, OTC: BRPUF)–Aug. 15 (estimate)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Aug. 9 (estimate)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Aug. 10 (estimate)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Aug. 9 (estimate)
• Dundee REIT (TSX: D-U, OTC: DRETF)–Aug. 3 (estimate)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Aug. 8 (estimate)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Aug. 13 (estimate)
• Innergex Renewable Energy Inc (TSX: INE, OTC: INGXF)–Aug. 10 (estimate)
• 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. 3 (estimate)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Aug. 7 (estimate)
• Shaw Communications Inc (TSX: SJR/B, NYSE: SJR)–Jun. 28 (reported)
• Student Transportation Inc (TSX: STB, OTC: STUXF)–Sept. 21 (estimate)
• TransForce Inc (TSX: TFI, OTC: TFIFF)–Aug. 2 (estimate)

Aggressive Holdings

• Acadian Timber Corp (TSX: ADN, OTC: ACAZF)–Jul. 27 (estimate)
• Ag Growth International Inc (TSX: AFN, OTC: AGGZF)–Aug. 13 (estimate)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Aug. 3 (estimate)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Aug. 3 (estimate)
• Colabor Group Inc (TSX: GCL, OTC: COLFF)–Jul. 20 (estimate)
• Crescent Point Energy Corp (TSX: CPG, OTC: CSCTF)–Aug. 10 (estimate)
• Extendicare REIT (TSX: EXE, OTC: EXETF)–Aug. 9 (estimate)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Aug. 3 (estimate)
• Noranda Income Fund (TSX: NIF-U, OTC: NNDIF)–Jul. 23 (confirmed)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Aug. 3 (confirmed)
• 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)

The only Portfolio company to report quarterly earnings thus far is Shaw Communications Inc (TSX: SJR/B, NYSE: SJR), which is on a slightly different reporting schedule. The company’s headline earnings per share were up 22 percent to CAD0.53, pushing down its payout ratio to just 46 percent and opening the door to another dividend increase, likely to be declared in October.

Underneath, the results were still quite solid but a bit more subdued, as management continues to take a conservative view of industry growth and competition trends.

The earnings were for the third quarter of fiscal 2012, and the company did report revenue growth of 6 percent for the nine months ended May 31.

Meanwhile, management reported the company is on track to hit its full-year free cash flow target of CAD450 million. That’s impressive, given the capital spending needs of maintaining the technological edge of its network.

The company reported less revenue from its economically sensitive media division as well as a loss of cable television customers. But it also maintained market share in faster growing, higher margin broadband operations.

As the latter is what’s key to the long-term health of the business, the upshot this quarter is Shaw is still in good shape to stay profitable for many years to come. That’s the foundation for reliable returns for investors.

So is the wave of insider buying we’ve seen this year, particularly since early May. Shaw is still a buy up to USD22 for those who don’t yet own it.

Until we get earnings on the rest, these stocks are likely to remain volatile as ever. That’s certainly been the pattern since first-quarter earnings reporting season ended.

The principal catalyst for the volatility the past couple months has been the drop in oil prices, with West Texas Intermediate (WTI) crude dropping from well over USD100 a barrel to under USD80 in a few weeks. This decline has raised questions about the profitability of producing NGLs, which has had a ripple effect across any sector having anything to do with energy.

The drop in oil and NGLs has further exacerbated concerns about anything to do with natural gas. And it’s taken its toll on the Canadian dollar as well, which has slid below parity with the US dollar despite the country’s better fiscal and trade position, stronger banking system and relative political stability.

A drop in the Canadian dollar is actually beneficial to the many companies doing business in the US, as the Canadian dollar value of such revenue rises. A lower loonie also gives companies a chance to lock in a better US dollar exchange rate for the future, further insulating them from a US dollar decline and letting them lock in more value from what still appears to be a steady US economic recovery.

On the other hand, a drop in the Canadian dollar versus the US dollar does hurt investors on this side of the border in two ways: It reduces the US dollar value of Canadian stocks, and it cuts into the US dollar value of dividends paid in Canadian dollars as well. That’s a pretty good reason why anyone paying their bills in US currency should never put their portfolio entirely into foreign currency.

The overall impact of falling oil, natural gas and NGLs prices–combined with a dropping Canadian dollar–has been more volatility, mostly on the downside for many Canadian Edge Portfolio picks.

There are still two Aggressive Holdings and eight Conservative Holdings trading above my buy targets.

As was the case last summer, however, most seem to be moving lower. And every time fears flare up in Europe, we can probably expect to see more downside, even if the actual company news and numbers remain positive.

This is the same market action we saw in 2010 and 2011, as macro fears of a 2008 reprise temporarily overwhelmed everything else in the eyes of many investors. The result those years was a mass exodus from almost everything except US Treasury bonds and German bunds, considered the safest havens in the worst of market storms.

US Treasuries hit their peak last October following the historic and ultimately ridiculous downgrade of Uncle Sam’s credit rating by Standard & Poor’s. They have come pretty close to those levels this year, as fears of a European meltdown going global have reignited conviction another 2008-09 meltdown is just around the corner.

Will the boo-birds prove prescient this time around? There’s certainly no shortage of challenges to the economy and markets here in July 2012. Asia and the US have definitely slowed. The outcome of the US elections is in as much doubt as ever, as is whether or not we really will see a “fiscal cliff” as a result of Washington not being able to reverse draconian spending cuts and tax increases kicking in January 2013.

And Europe, despite another patchwork quilt of agreements over the past month, is still mired in recession.

Arguing strongly against another 2008, however, is the fact that so many expect one. Refinancing needs up and down the How They Rate universe of companies continue to fall, as companies extend credit lines and pay off near-term maturities.

Even if credit conditions do tighten, the vast majority of companies can simply step back and wait for them to improve again. And in the meantime, overall corporate borrowing rates are at or near all-time lows, as they’ve been for nearly three years.

I’ve rarely seen a time when so many investors were expecting disaster for so many reasons. That’s a stark contrast from what we saw in 2008 and is very similar to the market of 2010 and 2011.

Here’s the bottom line: So long as this market follows the path of 2010 and 2011, we can look forward to a strong recovery for dividend-paying stocks in the latter half of 2012. That’s particularly true of Canadian dividend-paying stocks, which have the added benefit of being priced in a commodity-sensitive, or “hard,” currency.

And even if what we see between now and then more resembles 2008, so long as companies’ underlying businesses stay strong they’ll recover any downside they suffer in the meantime.

In other words, no matter what headlines parade through the press and in the so-called investment media, our primary task remains to focus on the health of the underlying businesses we own.

At least at this juncture, it appears all of our companies are healthy and growing. That includes the energy producers that have taken such a big hit in the wake of falling oil and gas prices.

The most exposed of Canadian Edge Portfolio energy producers is Pengrowth Energy Corp (TSX: PGF, NYSE: PGH). Shortly before post time on Friday, Jul. 6, the company announced it would reduce its monthly dividend by 43 percent, from CAD0.07 per share per month to CAD0.04.

That leaves a yield of a bit less than 8 percent.

The cut had apparently been priced in already to the stock for some time, as the shares remained in the same trading range they’ve been in since late June. The question is if this is the start of something worse for the company, or just a conservative move by management to control financial risk at a time of uncertainty for energy prices?

Management’s line of course is the latter. In the press release announcing the payout reduction–which is effective with the August payment–the company maintained cash saved by the cut would be used for acquisitions as well as to accelerate the development of the Lindbergh oil sands project.

CEO Derek Evans also cited CAD200 million in saved capital expenditures resulting from the recent merger with the former NAL Energy Corp and aggressive hedging as ways the company was keeping “dry powder.”

We’ll know a lot more about how Pengrowth is doing when it releases second-quarter earnings come out on Aug. 10 and how successfully it’s tacking toward being primarily an oil and gas liquids producer. In the meantime, the company remains in a strong financial position, with untapped credit lines and steady progress on debt reduction.

That’s a contrast from the current position of Enerplus Corp (TSX: ERF, NYSE: ERF), which as I discuss in Dividend Watch List still has enough leverage to make another dividend cut a real risk. Consequently, despite the cut, I plan to hold onto Pengrowth, at least until next month when we get a good read on how the NAL merger is progressing. I am, however, downgrading the stock to a hold in the meantime.

On a general note, no one should own an energy producing company unless they’re willing to take the risk that low oil and gas prices will threaten the dividend.

That’s even true of my High Yield of the Month selections ARC Resources Ltd (TSX: ARX, OTC: AETUF) and Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF), though energy prices will have to fall considerably further to really threaten them.

That also appears true for Crescent Point Energy (TSX: CPG, OTC: CSCTF), Vermilion Energy Inc (TSX: VET, OTC: VEMTF) and PetroBakken Energy Ltd (TSX: PBN, OTC: PBKEF). All three have seen their share prices sink due to falling oil prices.

But production plans remain on track, and dividends are safe unless oil crashes at least to USD60 a barrel and stays there.

Notably, Crescent and Vermilion both held their dividends steady through the crash of 2008 and are arguably much stronger outfits now. Crescent’s close of its purchase of Cutpick Energy adds another 5,600 barrels of oil equivalent per day to its production, extending scale and reach at a low cost. Crescent Point remains a buy up to USD48.

Vermilion, meanwhile, continues to affirm plans to fire up dividend growth when its offshore Irish gas project comes on stream in 2015. Vermilion’s a buy to USD50.

PetroBakken hasn’t been around as long. But its production plans still appear to be well on track, and it’s drawn only CAD215 million of a CAD1.4 billion credit line that won’t have to be rolled over until Jun. 2, 2015.

Lower oil prices may hurt it in the second quarter, but that will be at least somewhat offset by rising production. Buy PetroBakken up to USD18 if you haven’t yet.

Energy services companies are doubly leveraged to energy prices, as both drilling activity and the price they can charge rises and falls with the will to drill. Predictably, PHX Energy Services Corp (TSX: PHX, OTC: PHXHF) has taken a steep dive along with most of the rest of the energy services sector. The reason seems to be speculation that lower NGLs prices have stymied drilling and that revenue is about to fall off a cliff.

We’ll know a lot more when second-quarter earnings are released on or about Aug. 3. But with its global reach and technological edge, the recent drop in price looks well overdone. PHX Energy Services remains a buy up to USD14 for those who don’t already own it.