Station Casinos ( STN) shares rose Monday after the gaming company announced it was raising its dividend by 40%.

Just eight months after establishing a dividend, the company upped its quarterly cash dividend to 17.5 cents a share from 12.5 cents a share. Shareholders of record on May 14 will receive a payout on June 4. In reaction, shares rose $1.02, or 2.4%, to $43.93, setting a new 52-week high of $43.95 in early trading.

"The decision to increase our dividend reflects confidence in our ability to generate significant reliable cash flows over the long term," said Glenn Christenson, Station's CFO, in a statement.

Indeed, Station has generated free cash flow in seven of the last eight quarters and analysts have been boosting earnings estimates on the company, which has been taking advantage of the low-interest-rate environment to refinance debt. Furthermore, the company, which is the market leader in the Las Vegas locals market, has been signing management contracts with Native American casinos to fuel growth.

Analysts cheered the move, with Goldman Sachs analyst Steven Kent calling it "another reason to buy" the stock, saying the dividend boost won't hurt operating results.

"The dividend increase only requires an incremental $13 million of cash by Station per year, so we don't expect this to put any strain on Station's cash flows," said Kent.

With the slowly recovering economy boosting results in Station's core Las Vegas market and more Native American casinos set to come on line in the next two years, some think investors will see Station boost its dividend again.

"We believe that Station will likely continue to aggressively increase its dividend," said Morgan Stanley analyst W. Todd Scott in a note.

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