Qualcomm announced a 20 percent increase to its quarterly dividend and boosted its stock buyback program by $5 billion Tuesday.

The San Diego chip maker said the new dividend of 42 cents, up 7 cents, will be effective for quarterly dividends paid after March 26. The $5 billion increase in the stock buyback program brings the company's current authorization to $7.8 billion.

Qualcomm has bought back 27.6 million shares for $2 billion this fiscal year. The stock buyback program has no expiration date.

Shares of Qualcomm Inc. rose $2.12, or 3 percent, to $75.75 in premarket trading.