Drugstore operator Walgreen Co. said is raising its quarterly dividend by almost 29 percent to 22.5 cents and its board has authorized a new $2 billion stock buyback program.

Walgreen said the 28.6 percent increase from a regular dividend of 17.5 cents is the largest hike in the company's history. The dividend will be paid Sept. 12 to shareholders of record as of Aug. 19.

The company also said it has completed the $1 billion stock buyback program it announced in October. It said its board has approved a new $2 billion share repurchase program that expires Dec. 31, 2015.

Walgreen shares rose 62 cents to $43.17 in morning trading.

Walgreen runs 7,733 drugstores in Washington, D.C., all 50 U.S. states and Puerto Rico. It has about 500 more stores than its next-largest competitor, CVS Caremark Corp.

In June, the company reported strong fiscal third-quarter results, including a 30 percent rise in net income.

That profit exceeded Wall Street's expectations, but Walgreen also said it will stop doing business on Jan. 1 with Express Scripts Inc., one of the nation's largest pharmacy benefits managers, if the companies don't come to terms. That could cost Walgreen more than $5 billion in annual business.

Walgreen is based in Deerfield, Ill.