Three How They Rate companies cut dividends last month.

Two of the three–IBI Group Inc (TSX: IBG, OTC: IBIBF) and Westshore Terminals Investment Corp (TSX: WTE, OTC: WTSHF)–currently rate holds.

Westshore’s reduction for its Jan. 15 payment to CAD0.275 should prove temporary. The company’s metallurgical coal export terminal sustained damage on Dec. 7, 2012, when the bulk carrier Cape Apricot crashed into a trestle leading to one of the facility’s berths.

Westshore’s facility has the capacity to process and load about 9 percent of total global volumes of met coal, which is used primarily in the manufacture of steel. The accident will shave volumes by about 830,000 metric tons a month, leaving forecast volume for 2013 at about 28 million metric tons as opposed to the more than the approximately 30 million metric tons previously forecast.

Current estimates are for the berth to return to service in the mid- to late first quarter of 2013.

Given Asia’s ongoing manufacturing recovery–and the fact that interruption of service has tightened global supplies of met coal–cash flow should rebound quickly in the second quarter. That should enable Westshore to pay a dividend that’s closer to the pre-accident projection of CAD0.34.

There were no injuries suffered during the accident, and there was minimal environmental impact on the site. Other berths weren’t damaged, and Westshore should eventually be able to recover the cost of repairs and lost business from the ship owner as well as through its own insurance policies.

Westshore Terminals stock is a bit pricey–it’s currently yielding less than 4 percent–but rates a solid hold.

I highlighted IBI Group’s 50 percent dividend cut and conversion to a quarterly rate in a Dec. 13, 2012, Flash Alert. Since then there have been no new developments at the underlying business, and management will now be able to reduce debt balances in a difficult environment for its design and engineering services.

Encouragingly, the company has seen several upgrades from analysts pleased about the focus on the balance sheet as well as the stock’s lower price. And corporate insiders have remained net buyers, increasing holdings by 14.6 percent over the past six months, according to data compiled by Bloomberg. Some 75.8 percent of IBI Group’s shares are owned by related entities.

The stock has basically been in a trading range between USD6.50 and USD7 since early November, when disappointing third-quarter earnings began to stir concern about a potential dividend cut. Holding that range seems likely, given the lower dividend rate will be covered by better than a 2-to-1 margin in 2013, even if the global environment for the design business remains sluggish.

Ultimately, a breakout by IBI stock to the upside won’t happen until there’s notable improvement in the global economy. Importantly, however, the company still appears to be in prime position to take advantage when that happens.

That’s thanks in large part to continued business building with accretive acquisitions. And improvement in the US economy (21 percent of IBI sales are derived south of the border) should also provide a lift as the year goes on.

Even at a reduced rate the yield is still generous at over 8 percent. Consequently, I’m not going to dump IBI at this time. But recovering the now considerable paper loss is likely to take some months. Hold IBI Group.

By contrast, I recommend selling Poseidon Concepts Corp (TSX: PSN, OTC: POOSF). As I reported in a Dec. 27, 2012, Flash Alert, the provider of fluid-handling services to the energy drilling industry has suspended dividends indefinitely, chucked out much of its management team and formed a special committee to study its accounts receivable–with the likely result that much of its already booked revenue will have to be written off.

As I noted in last month’s Dividend Watch List, the horse has been out of the barn for some weeks here. What’s alarming now is that we still don’t know where the bottom is for the business. In fact there’s reason to doubt both the reliability of all previously released numbers and the ability of the company to continue as a going concern.

Last week one of the remaining neutral advisors on the stock shifted his recommendation to “sell” and slashed his 12-month price target from CAD5 to CAD1. Considering Poseidon traded in the double-digit range just a few weeks ago, that’s a relatively small step down from current prices. But it’s also a pretty clear sign that even people who’ve been really close to the company up to now realize they’re out of their depth.

Like everyone else who bought and/or recommended Poseidon, this is one I wish I could take back. But at this point there’s nothing to base a recommendation to hold or buy on, other than the vague hope that things aren’t as bad as they appear.

And that’s no basis for any recommendation. Sell Poseidon Concepts if you haven’t yet.

Here’s the rest of the Dividend Watch List, based on third-quarter numbers and outlooks that are essentially in for How They Rate fare.

Not all Watch List members are sells, though conservative investors should avoid all of them.

AvenEx Energy Corp (TSX: AVF, OTC: AVNDF) has announced the sale of its Elbow River Marketing unit to Parkland Fuel Corp (TSX: PKI, OTC: PKIUF), with an expected closing date of Feb. 13, 2013.

It’s a good deal for Parkland. But the CAD80 million in cash proceeds AvenEx will receive–plus CAD10 million to CAD15 million in debt reduction–are offset by the loss of a division that was critical to distribution coverage in 2012.

That leaves the company wholly reliant on a small energy production arm to fund the payout, which Bay Street projects will be cut from CAD0.035 to just CAD0.02 later this month.

Management has called a special meeting for shareholders on Feb. 19, at which time we’ll likely learn the results of the recent strategic review. Sell.

Bonavista Energy Corp (TSX: BNP, OTC: BNPUF) management has affirmed the January dividend and stated again its intention to shift capital spending to maintain it going forward if possible for this leading natural gas liquids (NGL) producer.

A further drop in oil, natural gas or NGLs prices, however, would pressure those economics and, by extension, make it tough to maintain the payout. Buy under USD15.

Chorus Aviation Inc’s (TSX: CHR/B, OTC: CHRVF) arbitration case with Air Canada Inc (TSX: AC/A, OTC: AIDIF) is rumored to be near resolution. The word, too, is that financial terms of the deal will support the current dividend rate.

The problem is high jet fuel costs and competition from WestJet Airlines Ltd (TSX: WJA, OTC: WJAFF) continue to pressure the bottom line at both Chorus and Air Canada.

The dividend isn’t a good long-term proposition, though a positive resolution of the arbitration case could be good for the stock. Sell.

CML Healthcare Inc’s(TSX: CLC, OTC: CMHIF) problem is increasingly erratic regulation in fiscally challenged Ontario, which some are calling Canada’s California.

As I noted last month, the most recent word from the company is that it’s “reviewing” dividend policy. The good news is a cut is priced in already. Hold.

Data Group Inc’s (TSX: DGI, OTC: DGPIF) launch of a new document and data management system is a good sign the recent dividend cut should be the last.

But Data Group’s accounting isn’t as clear as I would like, and the paper business is eroding. Hold.

Enerplus Corp’s (TSX: ERF, NYSE: ERF) primary cause for worry is the growth of the company’s debt. Efforts to ramp up oil production are on target, and management expects funds from operations to grow 11 percent in 2013.

But debt-to-annual funds flow is still projected at 1.9-to-1 as of Dec. 31, 2012, and lower energy prices could push that much higher. Hold.

EnerVest Energy & Oil Sands Trust (TSX: EOS, OTC: EOSOF), a closed-end fund, hasn’t cut its distribution since its inception in mid-2006.

But it will need to see some appreciation in its portfolio of mostly non-dividend paying holdings to keep that going in 2013. Sell.

Extendicare Inc (TSX: EXE, OTC: EXETF) won’t face immediate first-quarter 2013 cuts in Medicare reimbursement rates, as would have likely kicked in had the US gone over the “fiscal cliff.” The bad news is Medicare will be cut again when the spending side of the cliff is negotiated in coming months.

But the delay does give management more time to prepare, and demographic change continues to favor the profitability of its senior care facilities. Buy under USD8.

FP Newspapers Inc’s (TSX: FP, OTC: FPNUF) business is contracting, in terms of both subscriptions and advertising, and thus far digital growth isn’t keeping up.

Maintaining the dividend is the interest of insiders, who collectively own 30.5 percent of the stock. But it’s hard to see how this payout holds for the long term. Sell.

Freehold Royalties Ltd’s (TSX: FRU, OTC: FRHLF) fate is still all about energy prices, as the company depends on royalties collected from others producing on its lands. Hold.

GMP Capital Inc’s(TSX: GMP, GMPXF) core business is likely to face tough times again in 2013. That makes another dividend cut possible.

Note the payout was suspended entirely for the first quarter of 2009 due to tough stock market conditions. Hold.

IBI Group Inc’s (TSX: IBG, OTC: IBIBF) place on the Watch List is detailed above. Hold.

Labrador Iron Ore Royalty Corp (TSX: LIF, OTC: LIFZF) will benefit from the tightening of global iron ore markets due to the revival of Asian industrial growth. That’s good news for this company’s cash flow, which depends on royalty income from a single iron ore processing facility.

The current dividend should hold, including the “special cash” portion. But I’m keeping the stock on the Watch List until we get a good look at the next set of numbers, set to be reported in early March. Hold.

New Flyer Industries Inc’s (TSX: NFI, OTC: NFYED) fortunes are unlikely to turn until the US economy really begins to accelerate. Unless that happens, state and local governments will operate under stretched budgets.

And so long as that’s the case, the company will be challenged to make sales, no matter how advanced its buses are. Sell.

Poseidon Concepts Corp’s (TSX: PSN, OTC: POOSF) place on the Watch List is discussed above. Sell.

Precious Metals & Mining Trust (TSX: MMP-U, OTC: PMMTF) is tied to metals and mining stocks. And metals and mining stocks won’t rally significantly until the North American economy can pick up its pace.

In the meantime management is relying on smoke and mirrors to maintain the CAD0.10 monthly distribution. Sell.

Ten Peaks Coffee Company Inc’s (TSX: TPK, OTC: SWSSF) stock, ironically, was firmly in the black in 2012, as the manufacturer of specialty coffees managed to term out its debt and eliminate near-term refinancing risk.

Nonetheless, cash flow came up short, due to competitive pressures and volatile coffee prices. Unless that turns around another dividend cut appears inevitable. Sell.

Zargon Oil & Gas Ltd (TSX: ZAR, OTC: ZARFF) management has targeted a payout ratio of 35 percent to 50 percent for 2013. Standing in the way are volatile energy prices and plans for heavy capital spending through 2014, as the company lifts oil production and deemphasizes natural gas.

During a conference call last month, CEO Craig Hansen stated the company had “no desire at all to cut or to do anything with the dividend” in 2013. He qualified that, however, by saying “at prices anywhere near these levels.”