The top dividend stocks we are tracking in the short interest are 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) ticked way back up and gave back all the losses in the short interest from the prior report. This was 26.08 million shares as of April 15, up from 23.829 million in the prior report and up from 24.55 million shares short the month before that. This was the highest reading since the end of December. Altria’s dividend yield is now 4.95%.

American Electric Power Co. Inc. (NYSE: AEP) saw short sellers back off into the stock’s strength. This fell to 3.86 million shares in the April 15 short interest. March 28 short interest was down to 4.37 million share,s versus 5.18 million as of mid-March. AEP yields 3.7% as shares have risen and risen.

Annaly Capital Management Inc. (NYSE: NLY) saw a real drop as short sellers wanted to avoid paying that dividend. The April 15 short interest fell to 26.04 million shares, versus 29.85 million shares in the previous period and from 29.37 million shares before that. What is interesting is that the days to cover rose to 3.61 from 2.62 in the prior report. Annaly has a current yield of about 11.49%, based on its last payout.

AT&T Inc. (NYSE: T) saw a slight downtick to 78.29 million shares short as of April 15, versus March 28′s count of 81.68 million shares short. AT&T’s dividend is 4.86% after the earnings drop.

Duke Energy Corp. (NYSE: DUK) saw a significant decline to 6.85 million shares in the short interest from 7.8 million in the prior report. This was the lowest reading since October, and even the days to cover fell to 2.43 from 3.48. Duke has a dividend yield of about 4.1%, as shares are higher from the last report.

General Electric Co. (NYSE: GE) has seen some serious profit taking and new bets come against after earnings, but that was after the short interest date cutoff. The short interest actually did rise ahead of earnings to 82.69 million shares, versus 78.92 million shares in the prior report. The days to cover ticked up a bit to 2.43. GE still outyields the other conglomerates, with a 3.46% yield now that shares have taken such a hit.

Kimberly-Clark Corp. (NYSE: KMB) saw a serious increase in the bets against its massive rise. The stock has hit new high after new high, up until recent days, but the short interest jumped back up to 8.05 million shares from 6.7 million at the end of March. This consumer products giant keeps seeing the shares rise, and the yield is 3.13% now.

Kinder Morgan Energy Partners L.P. (NYSE: KMP) saw its third gain in the short interest as of April 15 to 3.728 million shares (units). The March 28 short interest was 3.357 million shares, versus 2.723 million shares short in mid-March. This is the highest short interest back to last November. Its dividend is actually a distribution and now is the equivalent of about 5.61%.

Merck & Co. Inc. (NYSE: MRK) saw a massive increase in the short interest that is larger than almost all others. This short interest in mid-April went up a whopping 33% to 28.5 million shares. The March 28 short interest was 21.33 million shares, versus 26.18 million shares short in mid-March. Note that this was the highest short interest reading since last August. Merck’s dividend yield is about 3.59% now that shares have appreciated.

Procter & Gamble Co. (NYSE: PG) saw a decent gain in the short interest, meaning that short sellers cleaned up on this week’s price drop. The April 15 short interest was 23.6 million shares, versus 21.329 million shares at the end of March and 24.744 million shares short in mid-March. P&G’s dividend is back up to 3.12%, now that shares sold off after earnings.

Reynolds American Inc. (NYSE: RAI) saw a large gain in the short interest to 10.75 million shares, versus 9.676 million shares at the end of March and a prior near-term high of 10.38 million shares in mid-March. Reynolds has a yield of about 5.13% as shares have remained resilient.

Verizon Communications Inc. (NYSE: VZ) short sellers must have known it was time to step aside into the stock strength. The April 15 short interest fell to 51.423 million shares, versus 57.637 million shares at the end of March and 60.962 million shares short in mid-March. Verizon yields only 3.98% since its shares have hit higher and higher multiyear highs.

International Business Machines Corp. (NYSE: IBM), Chevron Corp. (NYSE: CVX), 3M Co. (NYSE: MMM), McDonald’s Corp. (NYSE: MCD), United Technologies Corp. (NYSE: UTX), Caterpillar Inc. (NYSE: CAT) and Exxon Mobil Corp. (NYSE: XOM) will likely be the seven stocks of the 30 DJIA components that lead the index to 15,000. At issue is that the DJIA is a price-weighted index that does not care about the market capitalization. These seven DJIA stocks account for 43% of the entire weighting of the 30 DJIA components.

For instance, General Electric Co. (NYSE: GE) has a $245 billion market cap, yet its $23.59 share price generates a weighing of only 1.27%. Then you have 3M Co. (NYSE: MMM) with a 5.63% weighting because its price is $104.45, and United Technologies Corp. (NYSE: UTX) has a 4.9% weighting in the DJIA because its price is $89.13. Combined, two these companies have a market cap of $159 billion. So GE is worth almost 150% of the market cap, but its weighting in the DJIA at 1.27% compares to the combined weighting of 10.73% for 3M and United Tech. Now you know how silly the DJIA can be as an index, even if investors are usually referring to the DJIA when they say “the market.”

If you took the bottom seven DJIA components, you barely get a 7% combined weighting in the DJIA. These stocks could all double in a static scenario, where the other stocks remain the same, and you would barely get close to the 15,000 mark.

A review at IndexArb.com shows just how much these weightings matter, with a cumulative weighting after each component:

1) IBM 11.13; 11.13
2) Chevron 6.35; 17.48
3) 3M 5.63; 23.11
4) McDonald’s 5.16; 28.27
5) United Technologies 4.90; 33.17
6) Caterpillar 4.86; 38.03
7) Exxon Mobil 4.83; 42.86

International Business Machines Corp. (NYSE: IBM) is at $206.53, against a 52-week range of $181.85 to $211.79. The consensus target price is $225.75, implying an expected gain of 9.3%. IBM’s dividend yield is 1.7% but has been rising, and the company keeps buying back stock. Warren Buffett has bought a large stake that is likely to rise as well.

Chevron Corp. (NYSE: CVX) trades at $117.93, against a 52-week range of $95.73 to $118.53. Its consensus target price is $124.51, implying upside of 5.6%, and it has a 3.1% dividend yield. Imagine if oil demand is even a tad higher than expected in 2013, or that even the forecasts for global oil demand go up in 2014 when the broader global economy is expected to be stronger. Chevron is likely to go to all-time highs, and it is expected to raise its dividend in the coming weeks.

3M Co. (NYSE: MMM) is at $104.45, against a 52-week and all-time high of $104.81. Analysts have a price target of only $106.33, for a gain of close to 2% expected. The problem is that analysts have been slow to lift their price targets here, and 3M’s 2.4% dividend has been raised over and over and has much more room to grow. The trick is that the highest price target from analysts is $125, so some are already much more bullish here. If 3M hits $115, that is effectively a 10% gain. Plus that 2.4% dividend helps out as well.

McDonald’s Corp. (NYSE: MCD) trades at $95.81, against a 52-week range of $83.31 to $100.44. This was the best DJIA stock of 2011 and was the worst of 2012. The fast-food giant’s consensus price target of $99.82 implies upside of only 4.2%, but there is a 3.2% dividend, and the old consensus price target back before the 2012 sell-off was closer to $110. If McDonald’s gets its growth back with its healthier choices and affordable meals, there is more than 10% upside at the Golden Arches again.

United Technologies Corp. (NYSE: UTX) trades at $89.13, against a 52-week range of $70.71 to $91.51. The consensus price target of $96.47 already implies 8.2% upside, and there is the 2.4% dividend yield as well. The highest analyst target is $105, and the analysts have not been aggressive in raising their targets yet. That implies 18% upside to the street-high target.

Caterpillar Inc. (NYSE: CAT) trades at $90.21 and has been dragged down by emerging market and China growth. The consensus price target is back up at $111 now, implying upside of 23%. There is also the dividend of 2.3% that has a lot of room to grow if the company wants, and we would point out that Caterpillar shares have already traded at $114.25 in the past year. This one does not even have to hit a new high for the analysts to be right here.

Last on the list of seven stocks is Exxon Mobil Corp. (NYSE: XOM). At $89.61, it has a 52-week range of $77.13 to $93.67. Analysts have implied upside of 5.5% with the $94.51 price target, but there is a 2.5% dividend yield and its dividend is also expected to be raised in the coming weeks. If global oil demand forecasts are raised later this year for 2014 as the global economy is expected to recover, then the street-high analyst target price of $105 is suddenly much more realistic, and that would bring gains of 17%, plus the higher dividend.

It is almost sad the way that the DJIA is calculated. That being said, the rest of the 23 DJIA components only have to remain relatively the same while these top seven DJIA components only have to live up to expectations. That gets you to right at DJIA 15,000.

Here is something else to consider. These seven great stocks will not really perform in a vacuum, because that is not how things work in real life. That being said, if the rest of the market performs and the economy recovers as expected, then you could be looking at DJIA 16,000 at some point in 2014.

Several banks were very close to meeting all of our financial, historic and transformative criteria, and they may be eligible for the list of safest banks in 2014, or even after the stress tests and after decisions have been formalized over returning capital to shareholders. Some of the data may seem investor oriented, but the reality is that institutional depositors, creditors and trading partners generally evaluate peers with many of the same metrics. The global economic recovery has lost some steam at the same time that the stock market has recovered. The public needs to know which of the larger banks are safe, regardless whether the economy stabilizes or worsens again.

The criteria to be among the safest banks has to be very strict by nature. It also has to apply to the larger institutions, which are either money-center banks or have multiple-state geographies. To make the list, a bank either had to have a minimum of 100 branches or it had to have retail branches in multiple states as the base level for relevance and importance. We used banks with a minimum market capitalization of $3 billion and a minimum asset base of $20 billion. These safest banks had to have the bulk of their image tied to retail and commercial banking operations with many branch offices (probably eliminate, we said above). This eliminated the great fiduciary banks such as State Street Corp. (NYSE: STT) and Bank of New York Mellon Corp. (NYSE: BK), even though they certainly would be considered among the safest banks. It also eliminated the bank holding companies with no retail banking operations, such as Goldman Sachs Group Inc. (NYSE: GS) and Morgan Stanley (NYSE: MS).

24/7 Wall St. took a “Made in America” approach as well, and we screened out U.S. banking outfits that are actually subsidiaries of foreign banks. We also screened out the banks that were still in the process of making large, game-changing or transformative acquisitions, which are too difficult to evaluate in order to avoid absorbing any hidden or unknown risks.

With credit ratings becoming a risk again after a U.K. sovereign downgrade, and on the heels of the fiscal cliff and spending sequestration, all these banks also had to be considered investment grade by the major credit ratings agencies. A minimum hurdle of a 7.0% return on equity had to be seen, and we included the return on assets in this analysis as well. These safest banks had to have a minimum divided yield of 2.0% for their common stockholders, as proof that management believes that it can continue returning capital to shareholders through good and bad times, while still maintaining normal operations.

We screened out the nondiversified banks to avoid too many fluctuations throughout the business cycles. For an investment angle, we also gave preference to the banks where Wall St. analysts have a consensus price target above the current share price, indicating that some underlying value potentially remains. If a bank’s common stock was less than $10.00 per share, it had to have its metrics well above average among the largest banks.

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While Bank of America Corp. (NYSE: BAC) was the best performing of the 30 Dow Jones Industrial Average stocks in 2012, it and the money-center banking giant Citigroup Inc. (NYSE: C) actually do not qualify to be in the safest banks in America, even though the reality is that these banks are almost certain to survive another recession. The Federal Reserve deems them to still be problem banks, and they have so far not been freed up to raise their dividends or to increase share buybacks. That may change ahead, and the reality is that these banks are believed to be strong enough to weather most negative scenarios under the impending stress tests.

Finally, we eliminated banks that we did not feel would survive another recession. Consumers have to keep their money somewhere other than under their mattresses. Having an extremely safe bank to protect your hard-earned cash, nest-eggs and safety deposit boxes in hard times is much more important than how high of a rate depositors can get on certificates of deposit and in their checking and savings accounts. As far as quality is concerned, Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-A) has large stakes in three of the seven safest banks.

In mid-2012, banking regulators proposed to incorporate Basel III capital changes for substantially all U.S. banking organizations. Our list of safest banks shows the Tier-1 ratio today as well as the company’s projected Tier-1 ratio under the proposed rules. This also helps to eliminate any problems over safety and vulnerability ahead. If Basel III is finally adopted as proposed, the threshold for the Tier 1 common equity ratio will be 7%, consisting of a minimum level plus a capital conservation buffer.

Based on the analysis, we anticipate that future lists of the safest banks in America may include 10 or even 12 banks, rather than seven, because many banks only missed one criteria yet exceeded other hurdles handily. We still are not evaluating the community or single-region banks due to size or single geography risks. That being said, many of those community banks have better ratios than any of the larger safest banks in America.

This is the 24/7 Wall St. list of the seven safest banks in America for 2013 to deposit money into, ranked in order of safety, size by assets, and reach.  Our rank is based on financial stability, size by assets, and by reach.

American Water Works Co. Inc. (NYSE: AWK) is the top water utility in America and hit a new high of $39.77. It still yields 2.6%, even at a new high. Its smaller rival is American States Water Co. (NYSE: AWR), and that hit a new high of $52.97 and still yields about 2.8%. While this is defensive by the nature of water, water has proven its place in every sort of investment portfolio by now.

Warren Buffett’s Berkshire Hathaway Inc. (NYSE: BRK-B) hit a new 52-week high on the A-shares, and the B-shares hit a high of $101.48 today, versus a prior 52-week high of $101.08. That is a high for sure on the B-share,s as they are still relatively new. The A-shares hit a new high of $153,159.98 today, against a prior 52-week high of $153,090.00. Its prior all-time high was $151,650.00 in December 2007. While Union Pacific Corp. (NYSE: UNP) is a transport, this shows that Buffett’s acquisition of the great BNSF railroad has added value. Union Pacific is now down 1% on the day but it hit a new high of $138, and it still yields 2% for new investors.

Elsewhere in conglomerates, we have two hitting new highs. Honeywell International Inc. (NYSE: HON) hit $71.09, and 3M Co. (NYSE: MMM) broke the prior high of $104.39 by a penny so far. Honeywell still yields about 2.3%, versus 2.5% at 3M.

Celgene Corp. (NASDAQ: CELG) hit a new high on its accelerated buyback plan announced this morning. The new high here is $103.69, versus a prior high of $102.29, and it has a market cap of $43 billion.

Google Inc. (NASDAQ: GOOG) broke $800 for the first time ever this week. The new all-time high as of today is $808.87, and the consensus Thomson Reuters price target is $831.40.

Several consumer products giants are continuing to surge. Oddly enough, these are defensive stocks more than they are deemed raging bull market stocks. Colgate-Palmolive Co. (NYSE: CL) hit a new high of $112.93 and still yields 2.3% for dividend investors. Kimberly Clark Corp. (NYSE: KMB) hit a new high of $92.60 today, and it still yields 3.2% for new investors chasing the stock for the first time. Procter & Gamble Co. (NYSE: PG) screened for a new high, but the 52-week high is actually a tad elusive because of what is likely the ex-dividend. P&G can tell its activist “Thanks, now go away!” Its dividend yield is still 2.9% for new first time buyers. The Clorox Co. (NYSE: CLX) is small for consumer products players at $10.8 billion in market cap, but with a new high of $82.85, its yield is still 3.1%.

United Rentals Inc. (NYSE: URI) is the equipment rental giant that was also a failed private equity buyout back during the private equity bubble. Shares hit a new high of $56.87 today, and its market cap is just under $5.2 billion.

The Walt Disney Co. (NYSE: DIS) is feeling the love and boom from its entertainment properties and its new Star Wars acquisition. This screened out as a new high, but that high was actually yesterday and was still worth noting. Disney may not raise its dividend massively, but it sure has a low yield for a DJIA stock.

We recently opined that the DJIA 14,000 is likely to bring upside to our official 2013 peak price of 14,590 this year. For that to happen, more and more of these companies will be hitting all-time highs on the DJIA.

We have looked at the year-to-date performance of Warren Buffett’s portfolio holdings of Berkshire Hathaway Inc. (NYSE: BRK-B) to see which stocks he has that are helping to drive gains so far in 2013. We looked through all of Warren Buffett’s top stock holdings to identify the biggest winners. What is so interesting today is that the actual Berkshire Hathaway shares are outperforming about 90% of the actual stock holdings that make up the Buffett and Berkshire investment portfolio.

We have included the purchase or sale transaction history of each pick. We have also provided color and the implied upside to the Thomson Reuters consensus (mean) price target objective.

Phillips 66 (NYSE: PSX) remains a relatively new holding for team Buffett but was kept steady last quarter at 27.1 million shares worth more than $1.65 billion. It is also Buffett’s top stock in 2013 so far with gains of more than 15%. We expect that the way Mr. Buffett talked so positively about this oil refinery that he may add to the position ahead. We expect upside to the 1.6% dividend yield and this trades with more implied upside as the $61.30 price is short of the consensus analyst price target of $66.38.

Procter & Gamble Co. (NYSE: PG) has been on fire in 2013 and shares have been hitting new 52-week highs and this DJIA consumer products giant is up about 13.5% so far in 2013. What is interesting is that Mr. Buffett had been lowering his stake and it had fallen by nearly half of its share amount down to 52.8 million shares. That number may be even lower ahead as Buffett tends to keep selling stocks he starts selling out of. If the position is somehow static, that position would be worth more than $4 billion. This hit a 52-week high on Tuesday above $76.50 and the consensus analyst price target is $78.75 with a 3% dividend yield as of now.

We have two runner-ups which we are not formally counting as Buffett’s best performing stocks even though they have been in the holdings before. United Parcel Service Inc. (NYSE: UPS) is technically the third best position in the Team Buffett portfolio, but there is just one small problem. This had been almost entirely eliminated down to 59,400 shares from 261,900 shares last quarter and versus 1.429 million shares two quarters ago. That being said, this 9% gain year to date is almost immaterial for Berkshire’s $242 billion market cap. Ingersoll-Rand PLC (NYSE: IR) is yet another one which would have been great had Buffett remained on its side, but he has sold out of that position in late 2012 as well. That is too bad as this was up 8% year to date in 2013.

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Deere & Co. (NYSE: DE) is actually a new position for Berkshire Hathaway of about 4 million shares worth about $375 million or so today. As Deere & Co. has a market cap of over $36 billion, Buffett could certainly add exponentially to his stake here without rocking the wagon too much. Deere is up by about 8.5% so far in 2013 and the price of $93.75 still has upside if the $96.00 consensus analyst price target turns out to be accurate.

Verisk Analytics Inc. (NASDAQ: VRSK) was a new position, but after growing that Berkshire Hathaway’s new portfolio managers already trimmed that stake down. As of the last quarterly report Verisk was down to only 1.563 million shares worth close to $80 million. This was next on the list of Buffett’s top stock performers in 2013 with gains of about 7.5% year to date. With shares around $55 now, this is now right at the consensus price target of $55.55 for this risk and analysis provider to the insurance industry.

Torchmark Corp. (NYSE: TMK) is the last of the reviewed gainers for the best performing stocks out of Buffett’s 2013 holdings. This insurance stock holding was the same as the prior quarter at a stake of about 4.2 million after having been raised in prior quarters. This was up about 7% year to date and is worth more than $220 million. With shares around $55 now, the consensus analyst target price is almost $58.73.

Lee Enterprises Inc. (NYSE: LEE) was yet another top percentage gainer but it also is one which Warren Buffett and team have already reduced down to only 1.13 million shares from 3,225,822 shares shown initially. This holding was one that Buffett had asked for confidentiality treatment on in his newspaper endeavors. The gain here is 8.8% year to date, but the position is so small on dollar terms at $1.24 per share that it is not even worth noting as it pertains to the Buffett portfolio dollars. That being said, this is another gainer that is less of a stake for Berkshire Hathaway.

International Business Machines Corp. (NYSE: IBM) has been raised by Mr. Buffett as a larger position and this was listed as over 67.5 million shares at the last available date. That was up slightly from 66.63 million shares from the previous quarter and versus the prior quarter before that at 64.395 million shares. It is likely that Buffett has been writing put options to grow its stake. This IT-giant is up 6.4% so far in 2013 for Mr. Buffett and his stake here is worth more than a whopping $13.7 billion to Berkshire Hathaway. Berkshire is now the largest shareholder of IBM and the $203 share price still has much implied upside to the consensus analyst target price of $225.76.

It is rare that Berkshire Hathaway Inc. (NYSE: BRK-A) outperforms the stock market. While it is a conglomerate and has many aspects of a holding company, there is also a lot of characteristics here that make investors think they have some bond market safety as well.

Buffett’s newest round of stock holdings should be out in mid-February and his most recent holdings can be seen in full here. We tracked the changes each quarter on each position.

After having reviewed and compiled the Berkshire Hathaway winners and losers, there is one thing that surfaced as an obvious lesson: just because Warren Buffett sells out of a stock it does not automatically mean that you should turn your back on those companies.

The CDC reported that the proportion of all U.S. deaths caused by pneumonia and flu symptoms was 7.3% in the last week, and that above the epidemic threshold of 7.2%. The CDC figures use different measurements than Google but it said that California and the Southwest were at “normal” levels of flu while the other 9 regions of America were at “elevated” flu activity. Another issue is tha the flu vaccine which was administered this year was 62% effective and that is only a moderate effectiveness.

Service Corp. International (NYSE: SCI) is the largest funeral home operator and owner of cemeteries in the world with a market value of more than $3 billion. Its stock is at $14.35 against a 52-week range of $10.58 to $14.58. Its shares moved up 4% after the start of 2013 but have since stabilized. Service Corp. pays a disappointing dividend of just under 1.7%. Service Corp. came public in the summer of 1987, right before the market crashed in October and its shares suffered along with the rest of the market. Its shares dipped under $4 during the peak panic selling pressure of the last recession.

Stonemor Partners LP (NYSE: STON) is another cometary owner and operator and its price of $23.20 compares to a 52-week range of $20.10 to $28.68. We would note that there is a 10% dividend here. StoneMor has been public since 2005.

Carriage Services Inc. (NYSE: CSV) trades at $13.00 against a 52-week range of $5.61 to $13.59 and its market cap is only $235 million. This funeral home outfit has paid a dividend for less than two years now and its yield is only about 0.08%. Carriage Services came public in 1996.

Hillenbrand, Inc. (NYSE: HI) owns the Batesville Casket outfit and is worth some $1.47 billion, but it also has an industrial segment of its business. At $23.45 its 52-week range is $16.75 to $24.18. Its dividend yield is close to 3.3%. Due to a corporate break-up this goes back only to 2008, but Batesville has been operating for what the company says is more than 100 years.

Stewart Enterprises Inc. (NASDAQ: STEI) has multiple funeral and cemetery products and services for the death care industry and at $7.80 its market cap is about $660 million. Its 52-week trading range is $4.92 to $8.65 and its yield is close to 2.05%. It has been public since the early 1990s.

Matthews International Corporation (NASDAQ: MATW) is in the memorialization products and solutions for the cemetery and funeral home industries. At #43.75 its 52-week range is $27.42 to $34.36 and its market cap is $904 million. The yield here is 1.2% and it has been public since 1994.

The Google Flu Trends map noted, “Estimates were made using a model that proved accurate when compared to historic official flu activity data. Data current through January 10, 2013. Estimates for Connecticut for weeks 2012-12-16 to 2013-01-06 were affected by a software glitch and were retroactively updated on January 9, 2013.” If you look at the peak months of flu season from a year ago they were considered to be moderate and two years ago they only reached “high” in early 2011. The last high session was in late-2010 and it was high in the early 2009 period. The current period actually appears to be the only times that “Intense” has been used for 3 periods in a row.

It is hard to not report on certain issues from the financial side of the equation without sounding insensitive. The flu season is no joke, particularly for the deaths and the social impact it has for families that we are seeing and hearing about. It is also hard to forget that one quarter a long time ago on a Service Corp. disappointing earnings report that the company blamed part of its earnings weakness due to a very soft flu season.

The top dividend stocks we are tracking in the short interest are: 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), 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).

Altria Group Inc. (NYSE: MO) saw another gain in the short interest to 42.06 million shares, versus 41.81 million shares short. This is the highest short interest since mid-September. Altria yields about 5.3% and shares are still down about 10% from their recent peak.

American Electric Power Co. Inc. (NYSE: AEP) saw another drop to 4.05 million shares, versus 4.44 million shares short in mid-November. This is now less than half of the short interest peak of 8.38 million shares short in mid-August. AEP yields about 4.3%, which is lower now that shares have recovered some.

Annaly Capital Management Inc. (NYSE: NLY) saw its fourth consecutive drop, down to 24.2 million shares short at the end of November, versus 26.8 million shares short in mid-November. Actually, this was the lowest short interest in all year (again)! The king of mortgage REITs has a current yield of about 13.6%.

AT&T Inc. (NYSE: T) saw another gain to 54.95 million shares, versus 52.6 million shares short in mid-November. AT&T yields 5.3%.

Duke Energy Corp. (NYSE: DUK) saw a drop in the short interest at the end of November, but that was after a huge gain a month ago. The new short interest of 6.904 million shares is down from 7.433 million shares in mid-November. Its yield is about 4.8% now that its stock is down about 10% from its 52-week high.

Kimberly Clark Corp. (NYSE: KMB) saw a double-digit gain to 8.07 million shares at the end of November, versus 7.29 million shares in mid-November. It yields 3.5%.

Kinder Morgan Energy Partners L.P. (NYSE: KMP) saw its short interest drop substantially to 3.32 million shares at the end of November, versus 4.295 million shares short in mid-November. This is the lowest reading since the end of July. Its distribution rate, a yield-equivalent (before tax implications), is listed as 6.3%.

Merck & Co. Inc. (NYSE: MRK) saw a drop in the short interest in the wake of its dividend hike. The short interest at the November 30 settlement date was 23.75 million shares, versus 25.54 million shares short in mid-November. Its dividend yield is now close to 4%.

Procter & Gamble Co. (NYSE: PG) saw its short interest rise about 5% to 21.43 million shares short at the end of November, versus 20.36 million shares short in mid-November. P&G’s dividend is about 3.1% now that shares are back above $70.

Reynolds American Inc. (NYSE: RAI) saw its fifth consecutive rise in the short interest to 9.584 million shares short at the end of November. This is the highest short interest since May. This one yields about 5.5%.

Verizon Communications Inc. (NYSE: VZ) saw a 5.5% drop in the short interest to 45.02 million shares at the end of November, versus 47.65 million in mid-November. The telecom giant yields about 4.7%.

As a reminder, it takes a lot more conviction to short 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 and the ex-dates play into the equation as well.

JON C. OGG

Bank of America’s team sees a rise in 2013 or for a volatility spike in the VIX and the Global Financial Stress Index. Its report said, “As a result, we are becoming more selective and leaning toward attractive yielding equities and defensive sectors.” In short, those defensive stocks and high-paying dividends are where the firm is looking. It also said, “We expect the S&P 500 to reach the 1500 area, which is the range of the 2007- 2008 highs. But as we enter 2013, there is the risk of a 10-15% correction.”

So, here are themes and picks: Water is a new theme (something probably a bit late); health care and consumer staples are favored, along with telecom, utilities, mega-caps and yield.

Ten stock picks for 2013 with an average yield of 3.8%:

• Eli Lilly & Co. (NYSE: LLY)
• Pfizer Inc. (NYSE: PFE)
• Wal-Mart Stores Inc. (NYSE: WMT) at 2.2%
• Kimberly Clark Corp. (NYSE: KMB) at 3.4%
• Altria Group Inc. (NYSE: MO) a 5.3%
• CenturyLink Inc. (NYSE: CTL)
• American Electric Power Co. (NYSE: AEP)
• American Water Works Inc. (NYSE: AWK)
• Ventas Inc. (NYSE: VTR)
• Yamana Gold Inc. (NYSE: AUY)

JON C. OGG

If government spending is about to get chopped, and if the public is about to suddenly face higher taxes in general, it is no secret that investors would have to be cautious. After the run we have seen in stocks, it leaves very few safe places for Joe Public to invest in at a time when Treasury notes and bonds offer investment yields so low as to be insulting. 24/7 Wall St. has identified several key companies in defensive investment sectors that likely would maintain investor interest during such a risky period.

Companies with heavy government contracts are instantly out. Companies that are highly dependent on an optimistic consumer or that offer goods that the public can easily cut back on were also eliminated. Another issue, one which eliminated many great companies, is that Wall St. analysts had to have a consensus price target from Thomson Reuters that was higher than a share price today. Preference was given also to those companies that offer a dividend, as dividends create a return on capital for investors when uncertainty may be much higher than normal.

It seems as though there is a belief that the bulk of the big dividend hikes generally come during the first few months of a year, when companies are issuing their new longer-term guidance. That is only partially true, and investors have to know that many dividends get announced in the second half of the year, or even in the final quarter of each year. Now that Cisco Systems Inc. (NASDAQ: CSCO) has really hiked its payout and now that Dell Inc. (NASDAQ: DELL) has finally succumbed to our call to begin a big payout, we wanted to see which other big dividend hike expectations should be coming down the pipe between now and the end of 2012.

24/7 Wall St. expects some of these hikes to be significant and some of them may be imminent. Be advised that not every one of these payouts should be chased just because the dividend is on the rise. Some caution might even be prudent in some of these because their implied current dividend yields have contracted with a low-rate or no-rate policy from Ben Bernanke. Many are also at premium P/E ratios now as well.

These are the 12 big dividend hikes expected by 24/7 Wall St. between now and the end of 2012.

Altria Group Inc. (NYSE: MO) is due to get a dividend hike any time now, particularly since it had a very positive debt tender to lower its cost of capital. Literally it could be in the coming days, if its history is any barometer. We have been shocked at how much investors have chased this one, but our take is that the enthusiasm, until lately, has to be in anticipation that the $0.41 per quarter dividend will go up to $0.44 or even $0.45. Altria has to raise its payout, by our take, because its yield is now only 4.7%. Does it seem fair to get paid the same by Big Tobacco with its sin business (and long-term business risks) as you get from the two largest telecom players in America?

By the way, the old international play via Philip Morris International Inc. (NYSE: PM) is due for an imminent dividend hike as well. So far, its dividend hikes have been announced in the first half of September.

American Electric Power Co. (NYSE: AEP) only hiked its dividend 2% last year. But AEP remains very shareholder friendly, is an active lobbying company and is still on our list of favorites if we had to buy a utility stock after the formation of a dividend bubble. The $0.47 per share quarterly hike could be raised to $0.50 per share, for more than a 6% dividend hike, without paying much more than 60% of its earnings out. But it is diversifying away from fossil fuels and has cap-ex costs coming. Perhaps it can jump on the debt refinancing bandwagon to help out its bottom line.It has had three hikes in a row after hitting the hike-pause button during the recession, and AEP has paid a cash dividend on its common stock every quarter since 1910.

Amgen Inc. (NASDAQ: AMGN) may be the largest biotech company listed on a stock exchange, but the reality is that Amgen is now more like a pharmaceutical giant which is managing to still grow. The last dividend hike was in December and that went to $0.36 per quarter from $0.28 per quarter. Shares have risen by about one-third since the last dividend hike, so failing to raise the dividend would arguably be a dividend cut for new investors compared to a year ago. Amgen might prefer to pay down part of its $21+ billion in debt, but it may be forced into a hike. One word of caution here: the announcement might come in December but it might not get paid until later on the first quarter of 2013.

Read also: 20 Big Companies Which Don’t Pay Dividends — But Should

General Electric Co. (NYSE: GE) has had three consecutive quarters of a $0.17 payout. The problem in expecting a dividend hike is that GE has bumped its dividend up four times since June of 2010, and the $0.17 dividend payment of today compares to a peak dividend of $0.31 per quarter from back before the wheels came off the economy. What is different today is that GE is now finally getting a dividend from its finance unit again, and its shares have had a hard time going and staying much above $20.00. If GE is going to bump up its payout, then it is a signal that earnings growth will support paying out 50% of its pretax income.