Best Buy ups dividend, sets $5 billion share buyback

By Dhanya Skariachan

NEW YORK (Reuters) - Best Buy Co's <BBY.N> board raised its quarterly dividend by 7 percent to 16 cents a share and approved a plan to buy back $5 billion of common stock, sending its shares up about 4 percent.

The increase in the dividend takes effect with the October 25 payout to shareholders of record October 4, the world's largest consumer electronics chain said in a statement on Tuesday.

Sales at Best Buy stores open at least 14 months have fallen consistently in the past four quarters, but some investors still prefer the company for its steady cashflow and its ability to stay profitable and pay dividends.

Best Buy shares were up 3.8 percent at $32.75 in premarket trading.

(Reporting by Dhanya Skariachan, editing by Gerald E. McCormick and John Wallace)