Tim Hortons tops up stock dividend

Tim Hortonswill boost its stock dividend by 23 per cent and spend up to $440 million buying back its shares, the company announced Thursday as it released quarterly earnings that missed analyst estimates.

The chain's earnings of $100.6 million in the fourth quarter (69 cents a share) were up slightly from the same quarter a year ago, but came in shy of analysts' expectations of 77 cents.

Operating income dipped slightly, in part because of the company's decision toremove Cold Stone Creamery from Tim Hortons locations in Canada. Management said this wouldallow restaurant owners to "simplify their operations and focus entirely on their core business." Some U.S. outlets of Tims will continue to offer Cold Stone Creamery products.

The company also said its operating income was affected by the decision to close some underperforming restaurants in some U.S. markets.

Revenues rose more than 10 per cent to $898.5million, as the chain imposed significantly higher fees on its franchises to pay for renovations. Same-store sales in Canada rose 1.6 per cent.

Tim Hortonsalso renewed its share buyback program.

"We will continue to act decisively and make tough decisions where necessary to position our company for profitable growth," CEO MarcCaira said in a quarterly conference call with analysts.

Investors liked the company's news. Shares of Tim Hortons were up $1.04to close at $58.98in Thursday TSX trading.

The company will announcea new five-year strategyat an online investor conference next week, when itisexpected to address ways of dealing with stiff competition from McDonalds and othersin the fast-food sector.

Tim Hortons also announced plans to launch a co-branded Visa credit card thatwill offer instantloyalty rewards to CIBC clients. The card will be available in May.

Tim Hortons has 4,485 locations system-wide, with 3,588 in Canada. It plans to open 215 to 255 new locationsin 2014, with 140 to 160 of those in Canada.