* Q4 adjusted EPS C$0.43 vs C$0.19 yr-ago
* Beats analyst estimates for EPS C$0.26
* Assets under management up 21 pct
* Pledges to buy back shares, increase dividend (Adds CEO comments on dividends, buybacks, Scotiabank)
TORONTO, Feb 23 (Reuters) - CI Financial Corp (CIX.TO) reported sharply higher earnings on Tuesday and said it will likely increase its dividend and buy back shares in 2010 to return profit to shareholders.
The Toronto-based fund manager, which reported its fourth-quarter profit more than doubled as sales rose, said it had done far better than it had feared amid the financial crisis, putting it in a position to return capital to investors sometime soon.
"We will generate a ton of free cash flow again this year and the decision is really: Do we raise the dividend? Do we buy back shares?" Chief Executive Bill Holland told analysts on a conference call.
"Our default is to keep paying down debt ... But I would suspect that we would raise our dividend at some point this year and buy back, you know, a few million shares."
The Toronto-based wealth manager said earlier Tuesday it had adjusted earnings of 43 Canadian cents a share in the quarter, more than double the 19 Canadian cents a share in the the fourth quarter of 2008.
That was well above the 26 Canadian cents a share expected by analysts, according to Thomson Reuters I/B/E/S, though it was not immediately clear if the results were directly comparable because the figure provided by CI was adjusted for equity-based compensation expense.
Shares of CI rose 0.2 percent to close at C$21.16 on the Toronto Stock Exchange, more than double the 52-week low reached last February.
The company said retail assets under management increased 21 percent in the quarter to C$61.2 billion.
"It is really hard to believe the ride that we took in 2009. In my view, the year-end results are nothing short of shocking and I certainly feel better -- I think I'm off suicide watch now," Holland said.
CI said it had earnings before interest, taxes, depreciation and amortization of C$158.5 million, up 27 percent from a year earlier.
CI converted from an income fund to a corporation at the beginning of 2009 and spent much of the year cutting costs and overall debt as markets were roiled by the financial crisis.
While the quarterly dividend was unchanged at 6 Canadian cents a share, Holland said increasing the dividend was very likely in 2010, depending on tax treatment of dividends.
The other alternative is to buy back shares, a move that would likely increase the ownership of minority stakeholder Bank of Nova Scotia (BNS.TO).
Holland said he was not at all concerned about an increase in ownership by Scotiabank, Canada's third-largest lender.
"Whether they own 35.8 or 38.5 (percent) doesn't matter because they have got the ability to block anything. They have negative control already. So I don't -- today I don't have any reservations at all about buying back shares and moving their ownership up," Holland said.
A Scotiabank executive said in January the bank was happy with its stake in CI, but that when the time was right, the bank might take action to boost ownership in CI, one of Canada's last remaining independent fund managers.
$1=$1.06 Canadian Reporting by Andrea Hopkins; editing by Rob Wilson