The dividend will rise by four per cent, or two cents per share, to 49 cents in February to shareholders of record as of Jan. 3, 2013.
The Montreal-based bank has increased the payout three previous times since June 2011.
Laurentian (TSX:LB) missed expectations despite recording revenue and profit increases in the fourth quarter and fiscal year.
The bank earned $45.7 million, and $42.4 million attributable to shareholders for the period ended Oct. 31. Earnings equalled $1.51 per share, up from 99 cents per share a year earlier.
Adjusting for one-time items, earnings were $36.2 million or $1.17 per share, compared to $33.4 million or $1.26 a year earlier.
Net income in the quarter included a $24.3 million ($16.4 million after tax) gain from acquisitions. Return on common shareholders' equity rose to 14.2 per cent.
Revenue increased 15 per cent to $210.4 million from $182.4 million in the year-ago period. The contribution from AGF Trust added $20 million of revenues while MRS Companies contributed $10.3 million.
For the full year, it earned $140.5 million on $796.6 million in revenue, compared to $123.7 million on $738.3 million in 2011.
Earnings attributable to shareholders was $127.7 million or $4.98 per share, up from $111.3 million or $4.65 per share a year earlier. There were no adjustments to earnings in 2012 but one-time items reduced 2011 profits to $130.4 million or $4.93 per share.
Laurentian Bank was expected to earn $1.31 per share in adjusted profits on $214 million of revenues in the quarter, and $5.11 per share on $799.5 million of revenues for the year, according to analysts polled by Thomson Reuters.
"We successfully improved our earnings year-over-year and, in so doing, reached record profitability in a challenging retail banking and low interest rate environment, recording the eighth consecutive year of rising earnings per share," stated CEO Rejean Robitaille.
Faced with low interest margins, the bank's revenues were helped by the acquisitions and higher loans and deposits.
Shubha Khan of National Bank Financial said the rival Quebec bank is well-positioned to deliver further dividend increases because its 37 per cent payout ratio on next year's earnings forecast is below the 40 to 50 per cent target set by the bank.
Laurentian said it is targeting $145 million to $165 million in adjusted profits in fiscal 2013, equalling $5.15 to $5.85 per share.
"Laurentian Bank's earnings objective is underpinned by a revenue growth target of five per cent or more, which we believe underscores the tepid, low-to-mid single-digit loan growth outlook for household lending, particularly in Central and Eastern Canada," Khan added.
The analyst said the weaker-than-expected results in the fourth quarter were driven by weaker fee income contribution from the AGF Trust business, along with higher non-interest expenses, particularly incentive compensation.
The earnings miss and the bank's objective next year suggest that loan growth will be tepid in view of the slowdown in household lending, Khan added.
"We believe that banks shares will increasingly reflect the widening growth gap between household lending and commercial, which has obviously adverse implications for Laurentian Bank given that roughly 80 per cent of its loan book relates to household lending."
Laurentian Bank's provision for loan losses in the quarter decreased 38 per cent to $8 million, including a $3.1 million provision related to the acquired AGF Trust portfolio.
Salaries and employee benefits increased by $16.7 million or 24 per cent to $87.1 million, mainly due to employees added from the acquisitions. It also included a $2.5-million restructuring charge in the bank's head office departments.
Acquisitions and internal growth increased Laurentian's total assets by $6 billion to $34.9 billion. Net loans and bankers' acceptances increased 21 per cent to $26.7 billion.
Despite intense competition and a tightening of Canadian mortgage lending rules, Laurentian said it generated $1.2 billion from internal growth in 2012 while the acquisition of the MRS Companies and AGF Trust added $300 million and $3.2 billion in loans respectively.
On the Toronto Stock Exchange, the bank's shares lost 87 cents, or 1.9 per cent, at $44.88 in afternoon trading.