Giant chipmaker Intel Corp raised its quarterly dividend by 12.5 percent on Monday, citing strong business prospects.

Beginning with the first quarter of 2010, Intel said it will pay a cash dividend of 15.75 cents per share, or 63 cents per share annually.

Intel shares rose more than 2 percent to $20.23 in morning trading on the Nasdaq.

Intel's industry-leading product portfolio, outstanding execution and focus on the next wave of innovation and growth set the company up solidly for the future, Chief Executive Paul Otellini said in a statement.

Last week, Intel Chief Financial Officer Stacy Smith told Reuters that the chipmaker was on track to meet its fourth-quarter outlook and that a recovery in corporate spending on PCs could happen in the next 18 months. 

(Reporting by Anupreeta Das, editing by Gerald E. McCormick)