Short sellers may be getting smarter about all the inflows of capital heading into dividend stocks. The short interest fell in many of the names, but investors should understand that this short interest had been rising and rising in some of these cases and still looks very elevated when you compare these to the January and February short interest.

We evaluated the March 28 short interest versus the March 15 short interest in the following top dividend payers: Altria Group Inc. (NYSE: MO), American Electric Power Co. Inc. (NYSE: AEP), Annaly Capital Management Inc. (NYSE: NLY), AT&T Inc. (NYSE: T), Duke Energy Corp. (NYSE: DUK), General Electric Co. (NYSE: GE), Kimberly-Clark Corp. (NYSE: KMB), Kinder Morgan Energy Partners L.P. (NYSE: KMP), Merck & Co. Inc. (NYSE: MRK), Procter & Gamble Co. (NYSE: PG), Reynolds American Inc. (NYSE: RAI) and Verizon Communications Inc. (NYSE: VZ).

As we have said before, it takes much more conviction to short sell a stock that has a very high dividend. On top of having to pay a broker loan-call rate to borrow the stock, the dividend payouts have to be paid and the ex-dividend dates play into the equation as well.

Altria Group Inc. (NYSE: MO) saw a mild decline by the end of March, down to 23.829 million shares short from the 24.55 million shares in the short interest in mid-March. The big increase was in the days to cover, which rose to 3.31 from 1.33 days. Altria’s dividend yield is now just under 5%.

American Electric Power Co. Inc. (NYSE: AEP) short sellers lightened up as the share price rose higher yet again. The March 28 short interest was down to 4.37 million shares, versus 5.18 million as of mid-March. AEP yields 3.8% as the shares have risen.

Annaly Capital Management Inc. (NYSE: NLY) saw a small gain in its short interest to 29.85 million shares from 29.37 million shares. The days to cover fell to 2.62 from 3.8. Annaly has a current yield of about 11.3%.

AT&T Inc. (NYSE: T) saw a significant drop in the short interest as the shares rose. The short interest at March 28 was 81.68 million shares, versus 93.83 million shares short in mid-March. AT&T’s dividend is about 4.8% as the stock has risen.

Duke Energy Corp. (NYSE: DUK) saw its short interest tick up, but only marginally, after having dropped for three short interest reports in a row. The March 28 short interest was 7.80 million shares, versus 7.77 million shares short in mid-March. Duke has a dividend yield of about 4.2%.

General Electric Co. (NYSE: GE) shares have pulled back modestly from the highs, and the short interest actually fell rather than gained. The short interest was 78.92 million shares at March 28, versus 86.94 million shares short on March 15. GE still outyields the other conglomerates with a 3.3% yield.

Kimberly-Clark Corp. (NYSE: KMB) saw a much larger drop in the short interest than in the last report. Its short interest was 6.709 million shares as of March 28, versus M8.273 million shares as of March 15. This consumer products giant keeps seeing the shares rise, and the yield is 3.25%.

Kinder Morgan Energy Partners L.P. (NYSE: KMP) saw a very large gain in the short interest. The March 28 short interest was 3.357 million shares, versus 2.723 million shares short in mid-March. Its dividend is actually a distribution that now is the equivalent of about 5.7% on the screens.

Merck & Co. Inc. (NYSE: MRK) saw a large drop after having seen a slight decline in the short interest before. The March 28 short interest was 21.33 million shares short, versus 26.18 million shares in mid-March. Merck’s dividend yield is about 3.8%.

Procter & Gamble Co. (NYSE: PG) saw a decent drop in the short interest, down to 21.329 million shares short, versus 24.744 million shares short in mid-March. P&G’s dividend is currently almost 2.9% as its shares are still close to the 52-week high.

Reynolds American Inc. (NYSE: RAI) saw its short interest come right back down after rising last time. The short interest fell to 9.676 million shares from 10.38 million shares in mid-March. The gain seen was in the days to cover to 5.5 days. Reynolds has a yield of about 5.2% as its shares have risen.

Verizon Communications Inc. (NYSE: VZ) saw a larger drop than before, with the March 28 short interest down to 57.637 million shares from 60.962 million shares short in mid-March. Verizon yields less than 4.2% now that shares are basically at 52-week highs.

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