TORONTO, Nov 5 (Reuters) - Manulife Financial became the country's first financial companyto announce the resumption of dividend increases on Friday the day after the regulator lifted curbs on capital distributions, with a supplementary 5 Canadian cents-a-share dividend, and the repurchase of up to 39 million common shares.

The dividend, which brings its total quarterly payout to 33 Canadian cents ($0.265), results in an 18% increase. It will be payable on or after Dec. 20, the company said in a statement.

The share buyback limit represents about 2% of its outstanding common shares, Manulife said.

The Office of the Superintendent of Financial Institutions (OSFI) said on Thursday that it would lift https://www.reuters.com/article/canada-osfi-idCAL1N2RV293 its moratorium on share buybacks, dividend increases and raises to executive compensation by financial institutions, imposed on March 2020.

The change should result in average dividend growth of 23% for life insurers and 18% for the banks, analysts at National Bank Financial wrote in a note on Thursday.

"In removing capital distribution restrictions, OSFI’s commentary stressed that Management and Boards 'act responsibly' when making capital distribution decisions," they said. "As such, we expect to see a number of 5-10% dividend hikes over several quarters, as opposed to 20%+ ones over a shorter time period."

Manulife Chief Executive Roy Gori said on the company's third-quarter results call on Thursday that it remains committed to its dividend payout ratio of 30-40%.

Smaller rival Sun Life Financial executives pledged to return to a dividend payout ratio of 40-50% of underlying earnings on an analyst call on Thursday. It will use excess capital for share buybacks, when it doesn't have opportunity to use it for organic growth or to do deals, they said.

Manulife’s payout ratio this year has been 35% and Sun Life’s 37%, according to company statements. ($1 = 1.2454 Canadian dollars) (Reporting by Nichola Saminather, Editing by Louise Heavens)