BCE Inc. (NYSE: BCE), Canada's largest telecom firm, has really been kind to shareholders since scuttling plans to become a private company in 2008.

With Thursday's news of a 7% dividend hike that will take the annual dividend to $1.74 a share in 2010, the company has boosted its payout three times since the privatization plans were scrapped. BCE is a lot like its American peers AT&T (NYSE: T) and Verizon (NYSE: VZ) in that it yields over 6% (6.2% to be exact). That's as of Thursday's close and does not factor in the new dividend. The annual dividend for 2009 will be $1.54 a share.

BCE also announced it buyback $500 million of its own stock, it's second buyback plan since the company decided to remain public. The company completed a $1 billion buyback program in May. Noteworthy is the fact that BCE's dividend has increased 19% since the fourth quarter of 2008. Many companies don't have a five-year dividend growth rate that robust.

The company also announced it will make a special contribution of $500 million to its pension plan that will reduce pension funding requirements and expenses by $75 million and $45 million respectively in 2010, enabling the company to bolster per share earnings and free cash flow.

As a result, BCE now expects 2009 earnings to come in at the high end of the $2.40-$2.50 a share guidance issued earlier this year and free cash flow is expected to be $1.25 billion to $1.4 billion.

Needless to say, this an impressive collection of good news from BCE and it only serves to strengthen our feeling that companies with rising dividends and strong yields are a far better alternative than cash alternatives, especially for U.S. investors looking for conservative ways to combat historically low interest rates.

Telecom stocks vs. Treasuries or money markets? The answer is clear.