The Canadian Press

Canaccord Capital Inc. (TSX:CCI) reinstated its dividend Thursday after the financial services company reported a solid profit and higher revenues for its latest quarter and said its business is picking up strongly.

The Vancouver-based investment firm said it will reinstate its quarterly dividend, a year after it was suspended to protect its capital during harsh market conditions driven by the recession and capital industry crisis.

Shareholders will get a 5¢ a share payment starting next month.

“The board’s confidence in our financial strength in highly competitive, challenging market conditions, was the key factor in the decision to reinstate Canaccord’s quarterly dividend,” Canaccord president and chief executive Paul Reynolds said.

In its earnings report, Canaccord cited higher revenues and aggressive cost control for helping to turn a year-ago loss into a profit during the quarter ended Sept. 30.

“It was a good three months for us,” Reynolds told investors during a conference call Thursday.

He said Canaccord saw a “strong pickup in activity” in its capital market operation in September and believes that growth is “real and sustainable” until at least the end of the calendar year.

Canaccord reported a profit of $6.7 million or 12¢ per share for the fiscal second quarter of 2010, compared to a net loss of $5.4 million or 11¢ per share for the same time last year.

Revenues rose 11.6% to $123.7 million.

Analysts surveyed by Thomson Reuters were looking for revenue of $121 million and earnings of 12¢ per share.

Canaccord, one of Canada’s largest independent investment dealers, said aggressive cost containment helped revenues grow, with expenses at a flat $116 million year-over-year.

Its return on equity was 6.9% for the quarter, below its target of 20%, but a significant improvement from negative 5% a year ago.

As for the dividend, Canaccord said the five-cent a share payment will be made Dec. 10 to shareholders of record as of Nov. 20. The dividend and its payout rate will be reviewed each quarter.

Canaccord’s second-quarter revenues were 10% lower than the April-June period, when the company first reported a turnaround in its business.

Like most investment firms, Canaccord took a beating when stock markets plunged last fall. The company was also tied up in the asset-backed commercial paper debacle which led it to take millions in losses as part of a settlement program with investors.

Canaccord has been in restructuring mode for months, trying to boost profit by cutting back and working to increase its order books.

“Our evolution is not complete,” Reynolds said Thursday. “Some things are working very well, other need more work, others are in the very early stages of growth.”

Canaccord said it’s cost cutting measures aren’t complete.

The company’ shares were trading down 19¢ at $11.03 on the Toronto Stock Exchange Thursday.

That’s down slightly from its 52-week high of $11.63 reached at the end of October. The stock was trading at a 52-week low of $2.87 in December.

On Dec. 1, the company will change its name to Canaccord Financial Inc. and change its ticker symbol to “CF” on the TSX.