UPDATE 2-Dollar General's strong same-store sales, profit forecast lift shares


* Q4 same-store sales top estimates

* Co raises dividend, stock buyback program

* FY 2018 EPS forecast tops estimates

* Report in contrast to rival Dollar Tree

* Shares up more than 7 pct premarket (Adds company comments, dividend hike; updates stock move)

March 15 (Reuters) - Dollar General Inc posted strong quarterly same-store sales and gave an upbeat profit forecast for 2018, in contrast to rival Dollar Tree Inc, indicating moves to remodel stores and stock a wider variety of products were paying off.

The discount retailer also increased its stock repurchase program by $1 billion and its quarterly cash dividend by 12 percent, helping send shares up more than 7 percent in trading before markets opened on Thursday.

In order to drive sales, Dollar General has been investing in remodeling stores and lining its shelves with more private-label as well as health and beauty products, while also selling groceries and other items at lower prices.

That helped Dollar General's same-store sales increase 3.3 percent in the holiday quarter, easily beating analysts average estimate of a 2.7-percent rise, according to Thomson Reuters I/B/E/S. Net sales rose 2 percent to $6.13 billion.

The company said customers spent more on consumables such as packaged foods and health-care products, as well as seasonal items such as toys.

However, an increase in the sale of low-margin products weighed on the company's profit margins.

Dollar General's fourth-quarter net income jumped to $712.2 million from $414.2 million due to a $311 million gain related to U.S. tax reforms.

Excluding one-time items, the Goodlettsville, Tennessee-based company earned $1.48 per share, in line with estimates.

The company said it expects fiscal 2018 earnings of $5.95 to $6.15 per share. Analysts were expecting $5.60 per share.

Last week, Dollar Tree blamed higher freight costs for its disappointing quarterly sales and full-year profit forecast. (Reporting by Uday Sampath in Bengaluru; Editing by Savio D'Souza)