Shares of FedEx Corporation (FDX) rose in the after-hour session Monday, reaching a high of $164.22 after the package delivery company announced a 60% boost in its quarterly dividend.

Raising the Dividend Bar

On Monday after the market close, the Memphis-based company declared a quarterly cash dividend of 40 cents per share, boosting it from its prior quarterly cash dividend of 25 cents. The new dividend is payable July 1 to stockholders of record at the close of business on June 16. (See also: FedEx Stock to Trade Ex-Dividend.)

Prior to the increase, FedEx's dividend yielded 0.61% annually, which is below the 2.00% average yield paid by the average stock in the S&P 500 (SPX) index. What's more, its dividend yield pales in comparison to rival United Parcel Service, Inc. (UPS), which pays a 78-cent quarterly dividend that yields 3.03% annually. Monday's hike may be the beginning of a new trend in quarterly increases.

Last month, FedEx closed on its acquisition of TNT Express. The company believes the addition of TNT's assets will help strengthen both its global competitive positioning and logistics capabilities. And the fact that the company has decided to raise the dividend could be a means to pacify investors as the company works to synergize the deal ahead of its earnings report due out on June 21.

For the quarter ending May, FedEx is expected to deliver $3.30 per share, up from $2.66 a year ago, on revenue of $12.77 billion, up 5.4% year-over-year. For the full year, ending May, earnings are projected to decline 20% year-over-year to $10.78 per share, while revenue of $50.11 billion would mark a 5.6% rise from the year-ago quarter. (See also: Is FedEx a Buy After Strong Earnings? )

The Bottom Line

FDX stock closed Monday at $163.27, down 0.34%. The stock has risen 9.58% so far in 2016, compared with a 3.2% rise in the S&P 500 (SPX) index. The shares have declined 10.41% over the past twelve months, while the S&P 500 index has risen 0.79%. FDX stock has a consensus buy rating and an average analyst 12-month price target of $178, implying a 9% rise from current levels.

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