Bell Canada ups dividend by 5% for 2012

Bell Canada (NYSE: BCE) has increased its dividend by 5 percent with plans to use surplus cash to purchase up to CAD 250 million (USD 248 million) of its shares.

Beginning with a Q1 2012 payment on April 15, the service provider said its annual dividend will rise to CAD 2.17 (USD 2.12) a share from CAD 2.07 (USD 2.02).

Buoyed by both strong wireless and wireline-based broadband data and TV growth, this is the seventh time Bell Canada has raised its annual share dividend since 2008. This follows its move last year to raise its dividend by 7.7 percent.

In addition, Bell plans to make a CAD 750 million (USD 733 million) voluntary contribution to its benefit pension plan. Because the pension contribution is fully tax deductible, the service provider believes this will enable it to realize savings and increase earnings per share by about CAD 3 cents a share.   

"The new share buyback program and voluntary pension contribution represent a well-balanced use of surplus cash," said Siim Vanaselja, Chief Financial Officer of BCE and Bell Canada in a statement. "In a financial climate of declining interest rates and weak equity returns, accelerating the cash funding of Bell's future pension obligation to preserve a strong solvency position in the pension plan is a prudent action."

For more:
- see the release
- Bloomberg has this article

Earnings summary: Wireline in the third quarter 2011

Related articles:
Bell Canada's TV service growth helps drive Q3 revenues to $4.83B
Bell Canada's 13.5 % revenue rise in Q2 doesn't impress investors
Canada's CRTC to discuss usage based billing, broadband pricing
Bell Canada pays $10.3 million fine for false service price advertising

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