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Customers arrive at the Canadian Tire store in North Vancouver.ANDY CLARK/Reuters

Canadian Tire Corp. Ltd. is boosting its dividend almost 17 per cent even as the general merchandise, sporting goods and automotive parts and services retailer reported a dip in third-quarter profits.

The new quarterly dividend – up 5 cents to 35 cents per share – is payable March 1, 2013, to shareholders of record as of Jan. 1.

Based on the company's midmorning share price on the Toronto Stock Exchange of $70.74, down 42 cents, that would produce a yield of 1.98 per cent.

Canadian Tire said Thursday that net earnings in the three months ended Sept. 29 were $131.4-million or $1.61 per diluted share, down from $1.67 per diluted share in the comparable year-earlier period.

Consolidated sales were up 8 per cent, while consolidated revenue increased 4.6 per cent to $2.83-billion.

The company credits the inclusion of FGL Sports revenue for 13 weeks compared to six weeks in third-quarter 2011 as well as revenue growth at its Mark's Work Wearhouse clothing outlets and higher petroleum sales and financial services revenue.

However, consolidated net income declined 3.7 per cent compared to the prior year. Included in net income in the third quarter of 2011 were net benefits related to the acquisition of FGL Sports, reduced income tax expense and interest income received related to resolution of tax matters.

Excluding these items, net income would have increased 3.5 per cent in the most recent period.