Short Sellers Get Selective in High-Yield Defensive Dividend Stocks

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The short interest data for the final two weeks of May have been released, and the results are somewhat surprising when it comes to the top high-yield safe dividends we follow. Some of the changes were substantial, and it seems as though short sellers are getting out of the way of some of the more defensive high-dividend names ahead of summer. After all, these were one of the ways that investors can stay in the market but avoid some of the larger market risk this summer.

24/7 Wall St. would remind readers that short selling a high-dividend stock takes much more conviction and courage than short selling other stocks. On top of being short a stock, the short seller is also assuming the liability of paying out that dividend on top of just the cost to borrow a stock.

Altria Group Inc. (NYSE: MO) saw a rather large increase in the sort interest in May. The May 30 short interest of 19,977,664 shares was up almost 7% from the 18,701,343 million shares short in mid-May. This was the highest short interest of both 2014 and over the past year. We recently questioned why tobacco dividends are outyielding telecom dividends. Altria’s yield is down all the way to 4.7%, now that shares hit a new all-time high above $42.

AT&T Inc. (NYSE: T) saw its short interest rise 1.4% to 180,971,612 shares as of May 30 from 178,522,399 shares short as of May 15. This is about six days to cover. AT&T’s dividend yield is 5.2%, and it is valued at only 13 times expected 2014 earnings. We recently ran the analysis and saw that AT&T’s dividend is safe even after the DirecTV buyout, and AT&T was named as being among our own highest-yielding dividends that are safe to hold.

ALSO READ: Short Interest Heats Up Again in Solar Stocks

General Electric Co. (NYSE: GE) saw its short interest rise by 1.3% at the end of May to 65,480,818 shares, versus a short interest of 64,643,157 in mid-May. While this could be tied to the coming spin-off of the consumer finance unit, the reality is that the uptick doesn’t get it anywhere close to the more than 79 million shares short in February. GE’s common stock dividend yield is 3.3% since shares are back above $27.