Humana Inc. said Tuesday it will start offering a 25-cent quarterly cash dividend, as it becomes the latest large health insurer to reward shareholders with a sizeable payout.

A spokesman said this will be Humana's first dividend since 1993, when the Louisville, Ky., company spun off its hospital business to focus on health insurance. Humana also raised its profit forecast for the first quarter and for 2011.

Humana will spend about $42.5 million per quarter on the new dividend, which will be payable July 28 to shareholders of record on June 30.

In February, WellPoint Inc. also said it would start offering a quarterly cash dividend of 25 cents per share. WellPoint, which runs Blue Cross Blue Shield plans in several states, is the largest health insurer based on membership.

Big health insurers used to offer at most token annual dividends amounting to only a few cents. But that started changing last year when UnitedHealth Group Inc. — the largest health insurer based on revenue — said it would start paying a quarterly dividend of 12.5 cents per share.

Aetna Inc. then announced a 15 cent quarterly dividend in February, before WellPoint's announcement.

Stronger financial performances have given insurers a growing supply of cash to spend after stocking the reserves they need to keep for claims. The steady cash flow from larger dividends can make a company's stock more attractive to investors, especially in the managed care sector, where investors have worried about how companies will be affected by the health care overhaul. The overhaul aims to cover millions of uninsured people, but it also imposes a host of new rules and restrictions on insurers.

Humana also said Tuesday its board is replacing its share repurchase authorization of up to $250 million with an authorization for repurchases of up to $1 billion by June 30, 2013.

Humana provides Medicare Advantage plans, which are privately run versions of the government's Medicare program. It also offers Medicaid and commercial coverage and insurance for military members and their families.

The company said in a statement it was confident it could pay the dividends and execute a bigger share repurchase "while maintaining appropriate levels of capital in our subsidiaries and funding potential acquisitions and investments that reflect our long-term strategy."

The insurer reports on its first-quarter performance Monday. It said it expects earnings per share of $1.86, up from previous guidance of $1.15 to $1.20 per share.

Humana also revised its full-year earnings guidance up to a range of $6.70 to $6.90 per share from $5.95 to $6.15 per share.

Analysts surveyed by FactSet expect, on average, earnings per share of $1.26 for the first quarter and $6.29 for the year. However, analysts typically exclude one-time items from their estimates, and Humana does not in its forecast.