(Reuters) -Caterpillar has raised its share repurchase authorization by $20 billion and quarterly dividend by 8%, the company said on Wednesday, sending its shares up 2%.

With the expanded authorization, the company may now repurchase up to $21.8 billion of its common stock.

The heavy machinery maker expects to continue to return substantially all free cash flow from its machinery, energy and transportation (ME&T) business to shareholders over time through dividends and share buybacks.

Caterpillar has paid higher annual dividends to shareholders for 30 consecutive years and is a member of the S&P 500 Dividend Aristocrats Index.

The index measures the performance of S&P 500 companies that have increased dividends every year for the last 25 consecutive years.

The company increased its dividend to $1.41 per common share payable in August.

Shares of the global economy bellwether have gained nearly 12% this year as higher infrastructure spending from the U.S. government’s $1 trillion infrastructure law kept demand for large machinery robust.

However, in April, the company warned of a sales drop in the current quarter as volumes take a hit from dealers tightening equipment inventories and a slump in its businesses outside North America.

(Reporting by Shivansh Tiwary in Bengaluru; Editing by Sriraj Kalluvila and Maju Samuel)