United Parcel Service (NYSE: UPS), the world's largest package delivery company, raised its quarterly dividend by 4.4% to 47 cents a share, citing expectations for a gradual economic recovery and the expectation of a strong performance in 2010.

The dividend increase is the first in two years from the Atlanta based company. UPS last raised its dividend by three cents a share in January 2008.

The new dividend is payable on March 3rd to shareholders of record on February 16th.

The dividend hike takes UPS's annual dividend to $1.84 and based on Thursday's closing price, the shares would yield 3.2%.

UPS delivered 2010 guidance on Tuesday that bumped the shares higher and the company's fourth-quarter results beat analyst estimates.

Combine that with the dividend increase and we are seeing some good news from what is considered a bellwether stock.

Not to rain on anyone's parade, but the dividend increase from UPS is the least the company could do to reward shareholders. The stock is down 20% in the past two years.