Western Union Co. said its fourth-quarter earnings rose 28% as lower expenses offset weak revenue that was dented by negative currency impacts.

Shares rose 3% to $18.95 in recent after-hours trading as the company's 2015 earnings guidance was mostly above analysts' expectations.

The company's board also raised the quarterly dividend by 24% to 15.5 cents a share, up by three cents a share and authorized the repurchase of an additional $1.2 billion of the company's shares over the coming three years.

For the year, Western Union forecast per-share earnings of $1.58 to $1.65 and revenue decline in the low to mid-single digits on a percentage basis. Analysts polled by Thomson Reuters expected per-share profit of $1.59 and revenue growth of 2% to $5.74 billion. Western Union expects foreign-exchange rates will have a net negative effect of about $300 million compared with 2014 rates.

Western Union has faced increased competition in recent years from companies as diverse as PayPal, Apple Inc., and Wal-Mart Stores Inc. as it expands from a cash-based business to one with an increased focus on digital payments.

Chief Financial Officer Raj Agrawal said that in the latest quarter foreign-exchange hedging programs helped offset the effect of the stronger dollar and should help Western Union's results this year.

Overall, Western Union reported a profit of $221.5 million, or 42 cents a share, up from $173.4 million, or 31 cents a share, a year earlier. Revenue decreased 0.8% to $1.41 billion, but excluding currency fluctuations, revenue rose 4%.

Analysts polled by Thomson Reuters expected per-share profit of 34 cents and revenue of $1.44 billion.

Operating margin rose to 19.6% from 16.8% thanks to cost-savings initiatives and lower integration expenses.

Sales in its consumer-to-consumer business, its largest by revenue, declined 1.8% to $1.3 billion on currency impacts. Transaction volume grew 2%. Consumer-related sales on westernunion.com climbed 19% as transactions jumped 27%. Electronic-channel revenue rose 17%. The segment includes westernunion.com, account based money transfer through banks, and mobile money transfer.

Overhead expenses declined 11%, while total expenses fell 4%

Write to Tess Stynes at tess.stynes@wsj.com

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