The Home Depot announced Wednesday that its directors have increased its quarterly cash dividend to 8 1/2 cents per share.
The move represents an annual increase of 25 percent, and a 21 percent increase over the fourth quarter dividend of 7 cents.
The board also authorized $1 billion to repurchase outstanding stock.
"The board took this positive action based on the company's continued strong financial performance as evidenced in the record first quarter results," said Bob Nardelli, chief executive of the Atlanta-based company.
The cash dividend is payable on June 24 to shareholders of record on the close of business on June 10.
Home Depot shares rose 16 cents to close at $35.46 Wednesday on the New York Stock Exchange.