Short Sellers Made Big Changes in High-Yield Dividend Stocks

The top dividend stocks we tracking the short interest in are: Altria Group Inc. (NYSE: MO), AT&T Inc. (NYSE: T), General Electric Co. (NYSE: GE), Kimberly-Clark Corp. (NYSE: KMB), Merck & Co. Inc. (NYSE: MRK), Pfizer Inc. (NYSE: PFE), Procter & Gamble Co. (NYSE: PG) 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 gain after seeing a prior drop. The new short interest was 14.28 million shares, up from 13.4 million shares in mid-October. We have noticed that this short interest is still way down from the peak earlier in 2013. Altria’s yield is back down to about 5.1% since the stock is close to a 52-week high again.

AT&T Inc. (NYSE: T) saw only a tiny drop to 125.6 million shares in the short interest at the end of October, versus 127.09 million shares short in mid-October. The last report was a 2013 high in AT&T’s short interest, so keep in mind that short sellers are betting against it, and that was before the Vodafone buyout rumors started making the rounds. AT&T’s dividend is 5.1%, the highest yield of all 30 DJIA stocks.

General Electric Co. (NYSE: GE) shares keep hitting new post-recession highs while other conglomerates keep hitting new all-time highs. GE’s short interest also ticked up to 64.76 million shares at the end of October, versus 63.89 million in mid-October. GE remains king of the conglomerates when it comes to dividend payments, and that yield is now down to 2.9% since its shares keep rising. We do expect a dividend hike announcement from GE in the coming weeks.

Kimberly-Clark Corp. (NYSE: KMB) saw only a minor drop in the short interest to 9.41 million shares at the end of October. The mid-October short interest was 9.74 million shares. The short interest remains elevated, but it has yet to go over 10 million shares in 2013. Its yield is about 3.0% now that shares are well over $100.

Big Pharma short changes: Merck & Co. Inc. (NYSE: MRK) saw its short interest drop to 29.241 million shares, a drop of more than 10% from the 32.93 million shares in mid-October’s short interest report. Pfizer Inc. (NYSE: PFE) hardly changed at all in the bets by short sellers: 57.38 million shares on October 31 versus 57.69 million in mid-October. Merck has a yield of almost 3.8%, versus Pfizer’s yield of 3.1%.

Procter & Gamble Co. (NYSE: PG) saw a very large gain of 17% in its short interest. This count rose to 23.39 million shares short at the end of October, versus 19.99 million shares in the mid-October short interest. Be advised that this marks the highest short interest reading since April. P&G’s dividend yield is 2.9% now that shares are back to within $1 or so of a high.

Verizon Communications Inc. (NYSE: VZ) also saw a huge jump in the short interest. This report was almost 70.3 million shares short at the end of October, versus almost 63.4 million shares short in mid-October. Perhaps this is tied to bond hedging strategies after the huge debt offering, or perhaps it is just raw short selling. That is a gain of more than 10% in the short interest and represents a high of 2013. Verizon’s dividend yield is currently much lower than AT&T’s at 4.2%.