* Q1 EPS C$0.19 vs C$0.21 a yr-ago
* Q1 rev C$351.4 mln vs est C$336.8 mln
* Raises quarterly dividend to C$0.125/shr
* To keep investing towards digital push
* Shares fall 13 pct (Adds CEO, analyst comments, details in paragraphs 2-7,9; updates share movement)
By Maneesha Tiwari
BANGALORE, May 4 (Reuters) - Torstar Corp's (TSb.TO) quarterly profit slipped as the publisher of the Toronto Star, Canada's biggest daily newspaper, increased investment in its digital business to offset weak print advertising.
Torstar raised its quarterly dividend 35 percent to 12.5 Canadian cents per share. But its shares sank 13 percent and at least one analyst said the market was expecting a larger raise.
"(It) looks like the market was expecting a more significant increase which didn't happen, together with the soft results pulled stock price down," analyst Aravinda Galappatthige of Canaccord Genuity told Reuters by phone.
Shares of the company were down 12 percent at C$12.05 in Tuesday afternoon trade and were among the top percentage losers on the Toronto Stock Exchange. They touched a low of C$11.91 in the morning session.
Galappatthige said Torstar's margins were affected as it was trying to drive its digital business a bit faster than in the past.
Publishers are increasingly spending to move online as they look to spark interest in both consumers and advertisers to revive a business beset by declining circulation and advertising revenue.
"We remain committed to making investments back into our business, whether in digital or print, when we see opportunity to add value," Torstar Chief Executive David Holland said.
Torstar said it expects to invest C$5-C$10 million to boost its digital push and other initiatives this year, especially as the print advertising environment continues to remain bleak.
However, the shift to digital reading helped its romance fiction publishing brand, Harlequin, to post a 10 percent rise in EBITDA, excluding a foreign exchange impact, and CEO Holland expects the brand's underlying performance "solid."
The company's total first-quarter earnings fell to C$15.4 million, or 19 Canadian cents a share, from C$16.6 million, or 21 Canadian cents a share, a year ago.
Revenue rose 5 percent to C$351.4 million. Digital revenue grew by a third in the quarter, more than offsetting the soft print advertising revenue.
Torstar, which had earlier sold its stake in CTV to Bell Inc , got sale proceeds of C$291.6 million on April 1 and was used to repay debt.
It expects to record a related gain of C$190.2 million in the second quarter. (Reporting by Maneesha Tiwari in Bangalore; Editing by Don Sebastian and Gopakumar Warrier)