United Parcel Service plans to woo shareholders with a higher dividend and more share buybacks rather than use strong cashflow for large acquisitions, chief financial officer Kurt Kuehn told a German newspaper.

UPS pays a very high dividend and are planning a further dividend increase next year, Kuehn was quoted as saying in an interview published by Boersen-Zeitung on Thursday.

This year, UPS has paid a quarterly dividend of $0.47, up from $0.45 per share in 2009, boosted by strong cash flow.

For the first nine months, UPS generated $3.5 billion in free cash flow and bought back 9.3 million shares worth $589 million, according to its quarterly report.

Next year, we want to significantly increase that (buyback) volume, Kuehn told the newspaper.

He said the express delivery company -- a bellwether of the U.S. economy -- had no plans to use substantial amounts of cash for large acquisitions in the near future but would focus on small to medium-sized targets.

If we buy companies that cost $50 million, $100 million or $200 million that does not mean that a company of our size burns up all its capital, he was quoted by the newspaper as saying.

UPS would be interested in small to medium-sized targets in central and eastern Europe as well as Turkey, he said, brushing off speculation the company could be interested in Dutch group TNT's express delivery business.

If we buy, then possibly not in the traditional parcel business, but maybe in supply chain services or a specialized customer segment, he said.

(Reporting by Maria Sheahan; Editing by Dan Lalor)