Wal-Mart Stores Inc on Thursday said it raised its annual dividend by 11 percent, citing its strong underlying operations and free cash flow.

The world's biggest retailer said that for its current fiscal year, which began on February 1, its board approved an annual dividend of $1.21 per share, up from $1.09 per share a year ago.

With our free cash flow, Walmart has the capacity to grow around the world, make strategic acquisitions, and fund returns to shareholders through dividends and share repurchases, said CEO Mike Duke in a statement.

The retailer said it plans to return more than $4.5 billion to its shareholders in the form of dividends in its current fiscal year.

(Reporting by Nicole Maestri, editing by Gerald E. McCormick)