NEW YORK — Federated Department Stores has declared its first stock dividend in 15 years and authorized another $500 million to be used for stock repurchases.

The quarterly dividend of 12.5 cents a share will be payable July 1 to shareholders of record June 16 and is expected to result in annual disbursements of $95 million. Cincinnati-based Federated last paid dividends in 1988, before being acquired by Canadian real estate entrepreneur Robert Campeau and later going bankrupt.

Federated said it repurchased 11.4 million shares in 2002, but still has $120 million remaining from a previous authorization in addition to the new $500 million provision.

Federated chief executive Terry Lundgren commented in a statement that the firm "intends to continue to use share repurchases as well as the dividend to increase total shareholder return. In view of the substantial cash that Federated has on its balance sheet and our expected future cash flow, we will continue to have the flexibility to fund strategic investments, as well as further reduce our debt."

Standard & Poor’s rating service said the moves will have no immediate effect on Federated’s "BBB-plus" credit rating or its "negative" outlook. S&P’s Gerald Hirschberg wrote, "The rating assumes that Federated will carefully prioritize its use of free cash flow, that stock buybacks will be made prudently, and that the dividend, although a more permanent use of cash, is replacing a portion of share buybacks. Nevertheless, based on this development, Standard & Poor’s also believes that the rating incorporates a greatly diminished capacity for operating setbacks."

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