Short sellers have increased their bets against the stable high-dividend stocks that are in most Americans’ retirement accounts and mutual funds. The end-of-September short interest saw year highs in a few cases. Only a few of our key dividend holdings saw the short interest decline from the previous period.
Source: Thinkstock
We tracked the short interest in the following top dividend stocks: 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. We compared the short interest settlement dates of September 13 versus September 30 and added color on each.
Altria Group Inc. (NYSE: MO) saw short interest drop from 18.96 million shares to 15.56 million shares, about 0.8% of the company’s float. Altria’s yield is back up to about 5.5%, and the shares are trading around $35.
American Electric Power Co. Inc. (NYSE: AEP) saw another jump in its short interest, from 5.52 million shares to 5.91 million, or 1.2% of the company’s float. AEP yields about 4.5% now that shares have slipped below $44.
Annaly Capital Management Inc. (NYSE: NLY) is not exactly a safety stock, but it is in the high-yield mortgage REIT sector and is considered by many as the model or benchmark. Unfortunately, it also recently cut its dividend. Its short interest slipped from 50.7 million shares to 49.54 million shares, about 5.3% of the float. Annaly Capital still screens as a double-digit yield around 12.1%.
AT&T Inc. (NYSE: T) saw its short interest surge again, up from 121.5 million to 126.02 million shares. This was the seventh gain in the short interest, and it is the highest short interest in a year. AT&T’s dividend is 5.4%, even though its stock is back below $34. It has the highest yield of all 30 Dow Jones Industrial Average stocks.
Duke Energy Corp. (NYSE: DUK) saw a gain from 8.5 million shares to 10.66 million shares, or 1.5% of the company’s float. This was the second highest reading in about six months. Duke has a dividend yield of about 4.7%.
General Electric Co. (NYSE: GE) is the highest yielding conglomerate, and the short interest here ticked down, from 69.8 million shares to 68.7 million. GE shares come with a dividend yield of 3.2%, and shares are down nearly 2% in the past two weeks.
Kimberly-Clark Corp. (NYSE: KMB) saw a slight rise in short selling, but only from 9.56 million shares to 9.85 million. Its yield is about 3.4%.
Kinder Morgan Energy Partners L.P. (NYSE: KMP) saw another gain in the short interest, from 3.256 million shares (units) to 3.34 million. Its dividend is actually a distribution and is back down to the equivalent of about 6.6%, now that the unit price is around $80, versus a high of $92.99.
Big Pharma short changes: Merck & Co. Inc. (NYSE: MRK) saw its short interest rise slightly from 34.05 million shares to 34.19 million. Pfizer Inc. (NYSE: PFE) saw its short interest rise from 56.88 million shares at the prior report to 58.61 million. Merck has a yield of around 3.6%, versus Pfizer’s yield of 3.3%.
Procter & Gamble Co. (NYSE: PG) saw a small increase from 19.19 million shares short to 19.77 million. P&G’s short interest is one of the few that has declined generally, and its dividend is about 3.2%.
Reynolds American Inc. (NYSE: RAI) saw a its short interest rise marginally from 7.59 million to 7.6 million shares. Reynolds has a yield of 5.1%.
Verizon Communications Inc. (NYSE: VZ) saw a surge in its short interest from 58.7 million shares to 63.42 million shares. This marks the highest short interest in Verizon back to March. Verizon’s dividend yield is currently much lower than AT&T at about 4.6%.
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