WOONSOCKET, R.I. — Marking its eighth consecutive year of dividend increases, CVS Caremark on Tuesday said its board of directors approved a near 43% increase of its quarterly dividend to 12.5 cents per share of common stock.

The dividend is payable Feb. 2 to holders of record on Jan. 21.

At its Analyst Day in October 2010, the company announced that it set a targeted dividend payout ratio of approximately 25% to 30% by 2015, which implied a compounded dividend growth rate of nearly 25% per year.

"This substantial increase reflects our solid financial performance, our optimism with respect to future growth and our very significant cash generation capabilities. We remain committed to using our free cash flow to enhance total returns for our shareholders, through a combination of high-return investments, dividend increases and value-enhancing share repurchases," said Dave Denton, CVS Caremark EVP and CFO.