Best Buy Company Inc. ( BBY - Analyst Report ) , the leading specialty retailer of consumer electronic products, has increased its quarterly dividend to 17 cents per share, bringing its annualized dividend payout to 68 cents. This also marks the company’s third consecutive dividend increase in the past three years.

The new dividend rate reflects a 6% growth over the previous quarterly dividend of 16 cents per share (annualized 64 cents per share). As per the company, the increased dividend will be paid on October 2, 2012 to shareholders of record as of September 11, 2012. Based on the new payout and the closing market price as of June 21, 2012, the dividend yield came in at approximately 3.5%.

The move was quite necessary to boost investor confidence on the stock as the company has been struggling with sales declines in key categories including televisions, notebooks, digital imaging and gaming devices, which in turn, is taking a toll on its same-store sales results.

Moreover, Best Buy’s Founder and Chairman of the Board and the largest stakeholder of the company, Richard Schulze, stepped down after serving for almost four decades.

Speculation is rife that Schulze along with some private equity players might take over the company, as he is exploring options for his 20.1% ownership stake in the company.

However, amid this gloom, Best Buy announced a string of strategic measures to boost its top-line growth and generate long-term profitability. With its multi-channel strategy, the company intends to enhance its store formats while increasing its global footprint. Best Buy, through its cost reduction program, intends to generate $800 million in cost savings by fiscal 2015, including $250 million in fiscal 2013.

During the recently concluded quarter, Best Buy had $379 million in cash from operations. The company bought back approximately 4.6 million shares for $115 million at $25.07 per share and paid a quarterly dividend of 16 cents per share, aggregating $55 million.

Currently, we have a long-term Neutral recommendation on the stock. Moreover, Best Buy, which faces competition from Wal-Mart Stores Inc. ( WMT - Analyst Report ) , holds a Zacks #3 Rank that translates into a short-term Hold rating.