Western Digital Corp. says it will begin paying quarterly dividends and plans to buy back up to $1.5 billion in stock. But the hard-drive maker lowered its revenue forecast for the current quarter on modest demand.

The company said at an investor day Thursday that beginning this fiscal year, it aims to return to shareholders approximately 50 percent of its free cash flow through a mix of cash dividends and share repurchases.

Western Digital will pay a quarterly dividend of 25 cents per share on Oct. 15 to shareholders of record as of Sept. 28.

The company has bounced back from a shortage of hard drives after a flood hit factories in Thailand last year. But it said Thursday that it expects the industry's total available market for hard drives in the current quarter will be roughly 140 million units, versus its earlier forecast of 157 million units.

Western Digital said the change in forecast was due to "muted demand and inventory rebalancing." In turn, it forecast revenue of $3.9 billion to $4 billion for its current quarter, down from its previous expectation of $4.2 billion to $4.3 billion.

Analysts polled by FactSet are expecting revenue of $4.28 billion.

Western Digital reiterated that it expects to earn $10 per share on an adjusted basis for its full fiscal year. Analysts are anticipating $9.42 per share, on average.

Shares of Western Digital, based in Irvine, Calif., increased $1.10 to close at $42.58. Its shares slipped 92 cents, or 2.2 percent, to $41.66 in after-hours trading. The stock is up 38 percent in the year to date.