Avery Dennison (NYSE: AVY), the California-based maker of labels, office products and related fare, said it will be in a position to boost its dividend in the second half of this year and a share buyback plan may accompany the higher dividend.

That's welcome news for shareholders that endured Avery Dennison's 50% dividend cut last year.

The company slashed its payout to conserve cash and reduce its debt load. Avery Dennison is on pace to lower its debt burden by $350 million this year.

Most of Avery Dennison's free cash flow is generated in the second half of the year, making it easier for the company to digest a dividend increase in the summer or fall than earlier in the year.

The dividend hike would likely take Avery Dennison's quarterly dividend to 25 cents a share from 20 cents, according to Bloomberg data. Avery Dennison shares currently yield 2.3%.