There were no dividend cuts in the 160-plus strong Canadian Edge How They Rate coverage universe last month. I again credit conservative operating and financial policies employed by most companies, particularly since the 2008-09 crash.

Companies continue to refinance their remaining near-term debt at record-low interest rates, cutting costs and eliminating vulnerability to a sudden tightening of credit conditions. Several announced dividend increases, the ultimate affirmation of safety and the surest long-term path to a higher stock price as well.

Of course, no small credit to the lack of dividend cuts goes to the rebound in energy prices we’ve seen since summer. Oil’s rebound from the high USD70s to the low USD90s per barrel–and gas’ surge to USD3.50 per million British thermal units–are unlikely to produce operating numbers sufficient to fund sector dividend increases. But these higher prices have no doubt helped stronger energy producers rule out dividend cuts.

No one should invest in a natural resources producer who isn’t willing to live with volatility, and even an occasional dividend cut, so long as the underlying company is growing output and reserves. But the lack of dividend cuts in what’s been one of the more volatile sectors this year is welcome news indeed.

The calendar third-quarter 2012 numbers due out over the next six weeks or so could theoretically change that calculus by revealing heretofore hidden weaknesses. That’s why we have to look at them every quarter. And if history is any guide, some companies’ results will be poor enough to them on the Dividend Watch List and potentially even force dividend cuts.

The Watch List is my best effort to give readers the heads up on companies where bad news is most likely to happen.

As always, the best defense against an unexpected collapse of a stock you own is to diversify and balance so that calamity won’t sink the entire portfolio.

Below is the current Watch List.  The analysis reflects all second-quarter 2012 earnings releases and guidance calls as well as debt maturing through the end of 2013. I expect to see some of these companies exit the List next month following the release of third-quarter results. I also expect to see some new entrants based on same.

AvenEx Energy Corp (TSX: AVF, OTC: AVNDF), a small oil and gas producer, likely got at least some boost from rebounding oil and natural gas prices this summer.

Its real problem, however, is with shrinking production and rising costs. And until there’s real progress here, there’s the risk of yet another dividend cut in 2012. The Bloomberg Dividend Forecast is in fact for a reduction to a monthly rate of just CAD0.02 later this month. Sell.

Bonavista Energy Corp (TSX: BNP, OTC: BNPUF) is a major producer of natural gas liquids (NGL), though it’s still unclear how the profitability of NGLs has been affected by volatile oil and gas prices this summer.

Last month Bonavista successfully raised capital to complete a major acquisition that should be immediately accretive to profits. That’s a good sign it’s healthy, but management may still resort to a dividend cut if cash flow is squeezed enough by NGLs weakness. Buy under USD18.

Canfor Pulp Products Inc (TSX: CFX, OTC: CFPUF) will be among the first in the How They Rate universe to announce third-quarter results, with numbers due out on Oct. 24. The company will also declare a dividend at that time, so we’ll already know if there’s a fourth consecutive quarterly dividend cut by the time the next CE goes to press.

On the side of holding rather than selling, the stock is already pricing in a small reduction, and the company is the low-cost producer in this industry. Hold.

Chorus Aviation Inc’s (TSX: CHR/B, OTC: CHRVF) recent news is not good.

Our fear that Air Canada Inc (TSX: AC/A, OTC: AIDIF) is now clearly trying to move business away from Chorus took on new urgency last month. Air Canada announced it was dishing off routes to Chorus’ rival Sky Regional, without even allowing Chorus to bid on them.

Chorus and Air Canada remain locked in negotiations over cost benchmarking, with the latter still insisting on a drastic change that would almost certainly trigger another dividend cut for Chorus.

That’s good reason not to bite on that seemingly attractive yield. Sell.

Data Group Inc (TSX: DGI, OTC: DGPIF) doesn’t appear to be able to convince investors that its current dividend is sustainable.

Second-quarter numbers were favorable, with a payout ratio of 63 percent based on distributable cash flow. And there was even positive revenue growth. But management will have to prove itself all over again in the third quarter results, due out Nov. 8. Hold.

Enerplus Corp (TSX: ERF, NYSE: ERF) is bound to be helped by this summer’s higher energy prices. The recent bounce in the stock, however, seems fueled more by expectations that prices are headed a lot higher.

Meanwhile, some viewed the sale of Enerplus’ interest in private oil sands developer Laricina for CAD141 million positively. But I’m always leery of a capital-hungry company that sells assets. There are far safer ways to chase a yield of 6.5 percent. Sell.

EnerVest Energy & Oil Sands Total Return’s (TSX: EOS, OTC: EOSOF) primary problem remains that the dividend isn’t paid by company dividends or even by capital gains, but is essentially a return of capital.

Better results in the energy patch have helped. But this is not an income investment. Sell.

FP Newspapers Inc (TSX: FP, OTC: FPNUF) is in a difficult spot: The print newspaper business is tough even for media titans. This company’s management has an incentive to keep paying a huge dividend.

But until revenue stabilizes, a cut or even elimination of the payout seems inevitable. Sell.

Freehold Royalties Ltd (TSX: FRU, OTC: FRHLF) management warned with the release of second-quarter earnings that it may “revisit” the distribution rate next year as the company absorbs new cash taxes. That’s executive-speak for a dividend cut.

The big question is whether or not the summer recovery in oil prices spurred enough drilling on the company’s lands to reverse the recent rise in the payout ratio–and the jury’s out until third-quarter numbers come in on or about Nov. 9. Hold.

GMP Capital Inc (TSX: GMP, GMPXF) hasn’t seen conditions improve much over the past month for the company’s key financial industry niches. And GMP has also lost its long-time CFO.

Her replacement is a company veteran since 2006, which should be a good sign. But it’s hard to see how this company avoids a dividend cut next year. Hold.

Labrador Iron Ore Royalty Corp (TSX: LIF-U, OTC: LIFZF) unitholders have approved management’s plan to convert the stapled shares into ordinary common stock.

Under the plan of arrangement shareholders will get common shares equal to a fair market value of CAD3.875, which is the face value of the bond portion of the former staple share. After the exchange all of the new shares will be “consolidated,” meaning shareholders will wind up with the same number of shares they held before the conversion. The arrangement is expected to go through this week, with Labrador henceforth trading under the symbol LIF on the Toronto Stock Exchange (TSX).

Less obvious is what happens to Labrador’s dividend and whether losing the bond portion will have any impact on the payout. The company currently pays a “regular” quarterly dividend of CAD0.25 per share along with a “special” quarterly dividend half that size. Dropping the special would cut the yield down to about 3.4 percent.

Ultimately, what Labrador will pay shareholders depends on global iron prices. But until we get a real post-conversion dividend declared (likely mid-December), this stock is likely to remain on the Dividend Watch List. Hold.

New Flyer Industries Inc (TSX: NFI, OTC: NFYED) management provided a “business update” last month that forecast second-half 2012 results roughly on par with first-half results. That was considerably better than expected and is the result of the company winning major contracts with municipal authorities in New York City and San Francisco.

Unfortunately, first-half results were nothing to write home about, and the recent forecast means cash flow isn’t likely to cover the dividend for the year. The company has already cut its payout once this year, but it was less of a reduction than management had telegraphed previously.

New Flyer may be able to hold the current rate after all, despite a still-horrible market for new bus orders. But until we do see some real support in the numbers, the stock is best avoided and is definitely a Dividend Watch List candidate. Sell.

Precious Metals & Mining Trust’s (TSX: MMP-U, OTC: PMMTF) almost total lack of investment income and 20 percent selling premium to net asset value should be disqualifiers for any would-be buyers.

Put another way, the “yield” is basically a distribution of your capital back to you, at a discount and with a tax taken out. I like mining stocks in this environment. But this isn’t a good vehicle for buying them. Sell.

Ten Peaks Coffee Company Inc (TSX: TPK, OTC: SWSSF) management has been resolute since this company’s initial public offering that it would pay a generous dividend.

But with coffee prices volatile and the Canadian dollar rising again, it’s hard to see how they can make money, let alone dish out such a hefty sum. Sell.

Zargon Oil & Gas Ltd’s (TSX: ZAR, OTC: ZARFF) cash flow should get some help from the summer bounce in oil and natural gas prices. The real question though is whether or not there was a turn on production (to increase) and costs (to decrease). And we’re going to need to look at the numbers to get a real read.

It’s unusual for companies to cut dividends drastically so soon after a big reduction. And Zargon’s 40 percent haircut was announced just last month. But until the numbers do improve there is, unfortunately, the risk of worse to come. Hold.