(Bloomberg) ?Tyco International Ltd., the world?s biggest maker of security systems and electric connectors, will raise its quarterly dividend eightfold, the first increase in 12 years, as declining debt lets it return more cash to investors.

The dividend will jump to 10 cents a share from 1.25 cents, payable on February 1 to shareholders as of January 3, Bermuda-based Tyco said yesterday in a statement. Tyco last raised its dividend in February 1993, from 1.125 cents.

Chief executive officer Ed Breen, who first signalled in May Tyco might increase its dividend once debt-reduction goals were met, cut net debt in half to about $12.3 billion as of September 30 since taking over in July 2002.

The dividend payments will total $525 million in the current year through September 30, and the company said free cash flow for the year should be $4.5 billion.

?It indicates a level of comfort with the cash flow generation, the growth of the company,? said David Giroux, an analyst at Baltimore-based T. Rowe Price, which owns more than 20 million Tyco shares. ?You?ve gone from a company perceived as on the verge of bankruptcy to a company perceived as on the road to having no debt. It?s evolving very nicely.?

Free cash flow is cash from operations minus expenditures. Shares of Tyco, run from West Windsor, New Jersey, rose 32 cents to $34.40 in New York Stock Exchange composite trading. They have climbed 30 percent this year. Breen, 48, has a goal of cutting net debt to as low as $10 billion by next September. He streamlined the company, built by former CEO Dennis Kozlowski through $64 billion of acquisitions, by replacing the board and most of top management, cutting costs and implementing efficiency programmes. Tyco sells security systems and services through its ADT brand.

The dividend increase won?t affect Tyco?s credit rating of BBB, the second-lowest investment grade, Standard & Poor?s credit analyst Joel Levington said in a statement.

?The increase in dividends was largely anticipated, and we consider Tyco?s new dividend policy as consistent, if not modestly conservative, compared to those of peer global diversified industrial manufacturers,? Levington wrote. Tyco, run from West Windsor, New Jersey, is also the world?s biggest maker of industrial valves, plastic hangers and undersea fibreoptic cable. It?s the second-biggest maker behind Johnson & Johnson of disposable medical products like syringes.

For the first quarter ending on December 31, Tyco last month forecast per-share profit excluding costs for early retirement of debt and divestitures will be 40 cents to 42 cents a share, and $1.88 to $1.98 for the year ending in September 2005. The company reiterated both forecasts today.

Tyco is expected to earn 42 cents in the quarter and $1.96 for the year, the average estimates of at least 16 analysts surveyed by Thomson Financial. The company had net income of $719.2 million, or 34 cents, in last year?s first quarter and earned $1.35 for the year.