The shares Valero Energy Corporation are trading higher after the board of directors of the company approved the increase of its regular quarterly cash dividend on its common stock today.

The stock price of Valero Energy surged more than 5% to $50.68 per share at the time of this writing, around 2:36 in the afternoon in New York.

Valero Energy

Valero Energy ‘continue to prudently invest in capital’

The board of directors of Valero Energy increased its quarterly dividend on its common stock to $0.40 per share, an increase of 45% from 0.275 per share. The increase brings it annualized cash dividend rate on the company’s common stock to $1.60 per share.

In a statement, Joe Gorder, chairman and CEO of Valero Energy said the significant increase in the regular quarterly cash dividend of the company demonstrates their commitment to returning cash to shareholders.

“Our strong operating performance and financial strength have enabled us to continue to prudently invest capital to increase the competitiveveness of our business for the long term.”

The dividend will be payable in March 3, 2015 to shareholders of record at the close of business on February 11.

Valero Energy stock rating

Last week, JP Morgan Chase analyst Phil Gresh upgraded his rating for the share of Valero Energy to Overweight and raised his price target to $56 per share. The analyst previously had a Neutral rating for the stock.

Valero Energy emerged as the top pick of the research firm among oil refiners based on expectations that the company will deliver strong financial results for the fourth quarter and better outlook for the full year.

Gresh believed that Valero Energy should benefit from the recent widening in the spread of light and heavy differentials and the improvement of valuation.

There are 23 analysts covering Valero Energy. Thirteen analysts have a Buy rating for the stock while the rest have a Hold recommendation. Their average price target for the stock is $60.93 per share.

Over the past 52 weeks, the shares of Valero Energy traded from $42.53 per share to as much as $59.69 per share.

Valero Energy is scheduled to release its financial results for the fourth quarter on January 29.