TORONTO (Reuters) - A day of reckoning may await those investors who have bid up the share prices of Canada's established telecoms on attractive dividend growth while pushing competition concerns to the back of their minds.

The dominant players, BCE Inc's Bell companies and Telus plus cable-cum-telco Rogers , control some 95 percent of the Canadian wireless market and should gain from an explosion in smartphone use and attached rise in data, even as their landline offerings struggle.

But a combination of unkind regulatory rulings and a federal government keen on increasing competition threatens to devalue billion-dollar-plus investments in upgraded networks.

The incumbents' valuations have grown between 13 and 25 percent this year, although most watchers say that reflects decent yields during economic uncertainty as much as it does their ability to withstand market liberalisation.

"All three stocks have done exceptionally well over the last six months or so," said Jonathan Allen at RBC Capital Markets. "It feels like a game of chicken however. The problem is how long do you hold on to the stock before the oncoming rush of wireless competition starts to eat away at the margin on these guys?"

Rogers has increased its annual dividend 10 percent this year, according to Reuters data, while Telus and Bell have raised payouts by 5.2 percent and 7.4 percent respectively over the same period.

Both Rogers and Telus went ex-div last week, while Bell will follow suit on September 13.

While bullish on the sector, independent analyst Chris Damas of BCMI Research suggests investors sell into the ex-div on diminishing growth prospects and expected stock price weakness.

"It's worthwhile to trade out of them before the dividend date until the CRTC starts becoming a little more fair-handed about how they decide who is the winner and the loser in this game," he said.