Sony also cuts targets for smartphones and camera sales. (Reuters)

A complex Irish tax loophole helps Apple Inc. (NASDAQ: AAPL) save billions in taxes. (Reuters)

Merck & Co. Inc. (NYSE: MRK) sets a $5 billion share buyback through Goldman Sachs Group Inc. (NYSE: GS). (Reuters)

Sprint Nextel Corp. (NYSE: S) raises its offer for Clearwire Corp. (NASDAQ: CLWR), but many investors think the new sum is inadequate. (Reuters)

Jamie Dimon has a stronger position at J.P. Morgan Chase & Co. (NYSE: JPM) now that he will keep both the CEO and chairman jobs. (WSJ)

Prosecutors may use the Racketeer Influenced and Corrupt Organizations Act (RICO) to charge SAC Capital Advisors. (WSJ)

Ford Motor Co. (NYSE: F) will increase production by 200,000 vehicles this year. (WSJ)

ESPN, which is majority owned by Walt Disney Co. (NYSE: DIS), begins a series of large layoffs. (WSJ)

Phone companies start to sell subscriber data to marketers. (WSJ)

Vodafone Group PLC (NASDAQ: VOD) says it will use a dividend from Verizon Wireless to expand its main businesses in Europe. (WSJ)

Renault and Nissan aggressively invest to increase market share in India. (WSJ)

J.C. Penney Co. Inc.’s (NYSE: JCP) $2.25 billion loan, backed by real estate, will show how much leverage such assets hold. (WSJ)

The new Microsoft Corp. (NASDAQ: MSFT) Xbox will face rising competition from online games. (NYT)

The Bank of Japan decides not to increase its monetary easing plans. (FT)

Japan’s trade deficit rises as high-priced imports offset the effects of a weaker yen. (FT)

Rumors surface that Sony may spin out its entertainment unit. (Bloomberg)

In a close examination of their stocks to buy, Merrill Lynch analysts sought to (1) point out possible product launches and (2) highlight important milestones, including potential threats for the companies in their coverage universe. The firm also summarized quarterly growth and margin trends and provided a valuation snapshot for each company. Here are the stocks to buy from Merrill Lynch.

AbbVie Inc. (NYSE: ABBV) seems to be on the radar at most major Wall Street firms, despite the fact that 50% of all revenues are from one drug (Humira). Merrill Lynch is bullish on the stock given its attractive valuation, above-average dividend yield, and the potential for the pipeline to deliver a blockbuster hepatitis C (HCV) franchise over the medium term. Their price target for the stock is $49. The Thomson/First Call consensus target is $45.50. Investors are paid a 3.60% dividend.

Bristol-Myers Squibb Co. (NYSE: BMY) is a stock to buy. Merrill Lynch analysts do have some concern over the pipeline of future products. They believe that pipeline setbacks could pressure the stock, but a solid dividend yield should limit downside risk. The Merrill Lynch price objective for the stock is $45. The consensus target is much lower at $38. Investors receive a 3.50% dividend.

Eli Lilly & Co. (NYSE: LLY) is considered a “sum-of-the parts” stock to buy. Continued strong cash flow generation, a focus on shareholder return through a stable dividend, expense control and potential for positive pipeline news could improve sentiment over time and lead to multiple expansion. The Merrill Lynch price target is $65. The consensus is, again, much lower at $57. Shareholders are paid a 3.60% dividend.

Merck & Co. Inc. (NYSE: MRK) is a stock to buy with characteristics similar to the Eli Lilly story. Merrill Lynch analysts are looking for continued strong cash flow generation, focus on shareholder return through a stable dividend (with potential for growth) and share buybacks, and potential for positive pipeline news could improve sentiment over time and lead to multiple expansion. The Merrill Lynch price target for the stock is $53, while the consensus is at $51. Investors are paid a 3.80% dividend.

Pfizer Inc. (NYSE: PFE) rounds out the list of large cap stocks to buy. With a solid current revenue base and a growing pipeline, Pfizer may have the most potential of the stocks to buy. The Merrill Lynch price target is $33. The consensus is $32. Shareholder are paid a 3.30% dividend.

While the Merrill Lynch report did not assess macro issues, which can play an important role in driving stock performance, it was very helpful for company-specific analysis. Combining strong growth potential with consistent and possibly rising dividends, make large cap pharmaceutical stocks a good bet for any portfolio.

We tracked the short interest in these 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, 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 April 30 and April 15 and gave added color compared to the recent past on each.

Altria Group Inc. (NYSE: MO) saw a severe drop in the short interest, losing close to one-fifth of the shares short: 21.11 million versus 26.08 million. Altria’s dividend yield is now down to 4.8% since the stock is back up at highs.

American Electric Power Co. Inc. (NYSE: AEP) saw a big 12% pop in the short interest to 4.34 million shares from 3.86 million shares, even though this stock remains high in price again. AEP’s dividend yield is at 3.8%.

Annaly Capital Management Inc. (NYSE: NLY) saw a minor drop as short sellers wanted to avoid paying that dividend, down to 25.6 million shares short versus 26.04 million. Annaly has a current yield of about 11.9%, based on its last payout.

AT&T Inc. (NYSE: T) saw almost a 10% drop in its short interest to 71.73 million shares, versus 78.29 million shares. AT&T’s dividend is 4.8%.

Duke Energy Corp. (NYSE: DUK) saw only a small decline in the short interest after what had previously been a very large drop. The short interest fell to 6.814 million shares from 6.853 million shares in the prior short interest. Before that it had been 7.8 million the prior report. This is again the lowest reading since October, but the days to cover rose to 3.41 from 2.43. Duke has a dividend yield of about 4.1%.

General Electric Co. (NYSE: GE) has seen some serious profit taking, and new bets come against after earnings. We just saw the second rise in the short interest, up to 94.248 million shares, at the end of April. This is up from 82.69 million shares before and from 78.92 million shares short two periods ago. Also note that GE’s short interest is the highest in almost a year now. The days to cover ticked down to 1.75 from 2.43 days, and GE outyields the other conglomerates with a 3.3% yield.

Kimberly-Clark Corp. (NYSE: KMB) saw a marginal decrease in the short interest after what had been a serious increase in the bets against its massive rise. Its short interest fell to 7.896 million shares, versus 8.05 million shares short in mid-April and 6.7 million as of the end of March. This consumer products giant finally has seen shares pull back a bit, and the dividend is 3.1%.

Kinder Morgan Energy Partners L.P. (NYSE: KMP) saw its fourth straight gain in the short interest as of April 30, to 3.74 million shares (units). It was 3.728 million shares (units) in mid-April, and the March 28 short interest was 3.357 million units. This is yet again the highest short interest back to last November. Its dividend is actually a distribution and is the equivalent of about 6% now that the price has come back down a bit.

Merck & Co. Inc. (NYSE: MRK) saw a slight drop in the short interest to 26.57 million shares, but that was after the prior report jumped way up to 28.5 million shares from 21.33 million shares short. Merck’s dividend yield is about 3.8% now that shares have backed off marginally.

Procter & Gamble Co. (NYSE: PG) saw a rather large drop of 16% in its short interest to 19.82 million shares from 23.6 million shares in mid-April. P&G’s dividend is back up to 3.1%, now that shares sold off $4 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 only about 4.9% as shares are close to new highs all over again.

Verizon Communications Inc. (NYSE: VZ) saw a slight uptick to 52.197 million shares short. This was 51.423 million shares as of April 15 and 57.637 million shares at the end of March. Verizon’s short interest peaked at more than 61 million shares short in February, and its dividend yield is down to 3.9%.

The U.S. dollar index is trading down 0.28% today, now at 81.521. The GSCI commodity index is down 0.9% at 624.44. WTI crude oil closed down 2.6%, at $91.03 a barrel, following a massive increase in commercial inventories (more coverage here). Brent crude trades down 2.4% at $99.89 a barrel, as the spread between WTI and Brent now falls below $10 a barrel (more coverage here). Natural gas is down 0.4% today at about $4.32 per million BTUs. Gold settled down 1.8% today at $1,446.20 an ounce.

The unofficial closing bells put the DJIA down about 139 points to 14,700.95 (-0.94%), the NASDAQ about 30 points (-0.89%) to 3,299.13, and the S&P 500 fell -0.93% or nearly 15 points to 1,582.70.

There were a several analyst upgrades and downgrades today, including Biogen Idec Inc. (NASDAQ: BIIB) removed from “Conviction Buy” list and cut to ‘neutral’ at Goldman Sachs; Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) raised to ‘buy’ at Nomura; Berkshire Hathaway Inc. (NYSE: BRK-A) raised to ‘buy’ at Nomura; Amgen Inc. (NASDAQ: AMGN) added to “Conviction Buy” list at Goldman Sachs; and Oil States International Inc. (NYSE: OIS) cut to ‘underperform’ at BMO Capital Markets and cut to ‘market perform’ at Raymond James.

Earnings reports since markets closed last night resulted in some price moves today, including these as of the last half hour of trading: Affymetrix Inc. (NASDAQ: AFFX) is down 8% at $3.35; Bankrate Inc. (NYSE: RATE) is up 14.7% at $15.46; Leap Wireless International Inc. (NASDAQ: LEAP) is down 3.2% at $5.54; Spectrum Brands Holdings Inc. (NYSE: SPB) is down 4.6% at $53.44; Trulia Inc. (NYSE: TRLA) is up 13.1% at $32.86; Vanguard Health Systems Inc. (NYSE: VHS) is down 8.3% at $13.41; ADT Corp. (NYSE: ADT) is down 6.9% at $40.65; Chesapeake Energy Corp. (NYSE: CHK) is down 2.1% at $19.14 (more coverage here); Comcast Corp. (NASDAQ: CMCSA) is up 1.2% at $41.81 (more coverage here); Humana Inc. (NYSE: HUM) is up 4.4% at $77.38; James River Coal Co. (NASDAQ: JRCC) is up 32.8% at $2.19; Mastercard Inc. (NYSE: MA) is down 2.3% at $540.47; Phillips 66 (NYSE: PSX) is down 2.1% at $59.68 (more coverage here); and Viacom Corp. (NASDAQ: VIAB) is up 3.2% at $66.01 after posting a new 52-week high of $69.00 earlier today.

Before markets open tomorrow morning we are scheduled to hear earnings reports from Archer Daniels Midland Co. (NYSE: ADM), Avis Budget Group Inc. (NASDAQ: CAR), CBS Corp. (NYSE: CBS), Facebook Inc. (NASDAQ: FB), JDS Uniphase Corp. (NASDAQ: JDSU), Las Vegas Sands Corp. (NYSE: LVS), Seagate Technology PLC (NASDAQ: STX), Tesoro Corp. (NYSE: TSO), Visa Inc. (NYSE: V), Alpha Natural Resources Inc. (NYSE: ANR), Cigna Corp. (NYSE: CI), Goldcorp Inc. (NYSE: GG), and Monster Worldwide Inc. (NYSE: MWW).

Some standouts among heavily traded stocks today include:

Advanced Micro Devices Inc. (NYSE: AMD) is up 13.1% at $3.19. The chipmaker had no big news today, although it did introduce two new microprocessors and made some pricing changes that indicate that the company’s pricing may have stabilized.

Sirius XM Radio Inc. (NASDAQ: SIRI) is up 3.4% at $3.36 after posting a new 52-week (and 5-year) high of $3.39 earlier today. The satellite radio company posted a second consecutive high today, continuing to feast off yesterday’s earnings report.

Merck & Co. (NYSE: MRK) is down 2.8% at $45.67. The drug maker slid on its lackluster earnings results and took a slice out of its sales and earnings targets for the rest of the year.

Stay tuned for Thursday. We have noted the following events on the schedule (all times Eastern):

• 7:30 a.m. – Challenger job-cut report
• 8:30 a.m. – International trade
• 8:30 a.m. – New claims for unemployment benefits
• 8:30 a.m. – Productivity and costs
• 10:30 a.m. – EIA weekly natural gas storage report
• 4:30 p.m. – Fed balance sheet and money supply

Before calling it a bubble, there are many things to consider. While there are some major ETFs in the sector, we have noted previously how these biotech ETFs are often misrepresented by their name, given the weightings and stocks they hold. Another issue is culling out the risky one-candidate companies from the established biotech leaders. A long-term comparison also can be made to drug giants for relative valuation and for dividends.

As far as why we are asking if a bubble is forming here, it is not just because these stocks have performed well. The four major U.S. biotech players are Amgen Inc. (NASDAQ: AMGN), Biogen Idec Inc. (NASDAQ: BIIB), Celgene Corp. (NASDAQ: CELG) and Gilead Sciences Inc. (NASDAQ: GILD). All four companies hit new all-time highs this last week.

24.7 Wall St. is taking a look at each for valuation metrics by market capitalization, forward earnings multiples, sales and earnings growth expected, and paring up the current stock price against the Thomson Reuters consensus price targets from Wall Street analysts.

Before we get into biotech, Pfizer Inc. (NYSE: PFE) and Merck & Co. (NYSE: MRK) need to be evaluated. Both drug giants were trading very close to multiyear highs going into earnings this week. Somehow the market did not anticipate that both companies were going to offer muted guidance ahead. Merck is now down almost $4 from its 52-week high of $48.78, and Pfizer is down more than $2 from its 52-week high of $31.15. Both stocks trade at 12 or 13 times the projected 2013 earnings estimates from Thomson Reuters.

What sets Big Pharma stocks apart from biotech stocks is that there is just no revenue growth expected this year, or next even, if the so-called patent cliff woes are mostly behind these companies. Pfizer’s common stock dividend yield is 3.2%, versus 3.6% for Merck. Only one of the major biotechs (Amgen) pays a dividend as the sector is still tracking for growth.

Amgen Inc. (NASDAQ: AMGN) took a beating after its earnings report last week. Even after being added to the Conviction Buy List at Goldman Sachs, the biotech giant is up 2% at $106.25 after a recent all-time high of $114.95. The firm’s price target is $130 now, with a consensus target from analysts down at $111.36 and a street-high target of $133 for Amgen. It took a sell-off for this stock to get back under the consensus price target. Amgen shares are still up 24% so far in 2013 after the recent sell-off. The good news is that Amgen trades at about 14.6 times expected earnings this year, but the bad news is that sales growth is projected to be less than 5% for this year and next. Amgen is not really expensive for a biotech stock, but it is missing that monster growth. Amgen also acts like a new Big Pharma stock now that its dividend yield is 1.8%.

Biogen Idec Inc. (NASDAQ: BIIB) is now down $10 from its recent all-time high of $226.18. It was removed from Goldman Sachs’ Conviction Buy List, but at $216.25 its consensus price target is all the way down at $202.56. Biogen’s multiple sclerosis franchise is now approaching a total domination in the field. It pays no dividend but is expected to post 16% to 17% sales growth in both 2013 and 2014. The problem that investors may face going forward is that valuation is stretched at more than 27 times the consensus 2013 earnings estimate, since this stock has risen a whopping 48% so far in 2013.

Celgene Corp. (NASDAQ: CELG) is down just over $10 per share from its recent all-time high of $128.52. The consensus price target of $124.69 is also under the most recent high, while the street-high price target is up at $143.00. What Celgene has going for it is that some market pundits expect its earnings to double by 2015 to 2016. Sales are expected to rise more than 10% for at least the next two or three years, as well. That being said, Celgene trades at about 21 times expected 2013 earnings estimates, now that shares have risen a whopping 50% so far in 2013.

Gilead Sciences Inc. (NASDAQ: GILD) is down about $5 from its recent all-time high of $55.16. Gilead trades at about 25-times expected 2013 earnings, and its shares are up by 37% so far in 2013. The consensus price target is above the prior high at $58.20, and the highest target price is around $70 for the HIV drug leader. Sales continue to grow in the double-digits and are expected to maintain that path for at least the next two years.

Now before you run off scratching your head, there are the market capitalization figures to consider, versus $208 billion for Pfizer and $138 billion for Merck. Amgen is king at about $80 billion as of now, and it seems to be the first biotech that could ultimately reach the mega-cap class at $100 billion. The problem with thinking Amgen will be first is that analysts project more upside and growth at Gilead, and its market cap is almost $77 billion. Biogen Idec is worth more than $51 billion and Celgene is worth about $49 billion.

Biotech stocks have performed incredibly well so far in 2013. For value-oriented investors, these still need to soften up in price. For investors who chase growth at any price, there is still some perceived upside. The good news is that biotechs have pulled back and now Big Pharma stocks have all pulled back. The bad news is that if the market does not keep rising, it is very likely that investors will look for more patient entry points before chasing these high gains and valuations in biotech.

For those looking for undervalue growth with more risk, a firm called PropThink has just issued a list of biotech stocks that it feels are not represented with proper valuations (yet) by the market.

One more issue we noted in much more detail in our ETF Folly for Biotech ETFs is that the exchange traded fund universe is very underrepresented in this sector, regardless of valuation analysis. The top ETFs here are the iShares Nasdaq Biotechnology (NASDAQ: IBB), SPDR S&P Biotech (NYSEMKT: XBI), First Trust NYSE Arca Biotech Index (NYSEMKT: FBT) and the Market Vectors Biotech ETF (NYSEMKT: BBH). Note that the combined market capitalizations are not quite 2% of the combined market valuations of just the top four biotech stocks.

In Pfizer’s case, the loss in 2011 of patent protection on its Lipitor product has punched a serious hole in the company’s revenues. Sales of Lipitor in the first quarter were down 55% year-over-year. Pfizer also felt a negative impact from the weaker Japanese yen.

Amgen experienced weaker sales from two of its anemia drugs, a drop that could not be overcome by higher sales of its new osteoporosis drug. Sales of its best-selling drug for rheumatoid arthritis were also slightly below expectations.

Merck is expected to post earnings per share (EPS) of $0.79 on revenues of $11.09 billion when it reports earnings tomorrow before the markets open. Three months ago, the consensus estimate for quarterly earnings was $0.90. In the first quarter of 2012, Merck posted EPS of $0.85 on revenues of $11.73 billion.

Shares of all three stocks reached a new 52-week high last week, before starting to slide following Amgen’s report. Amgen is down about 5.5% since reporting results, Pfizer is down about 4.7% and Merck holds onto a tenuous 0.3% gain. For the past year, though, Amgen is up 48%, Pfizer is up 35.5% and Merck is up more than 26%.

Shares of Pfizer are down about 3.5% today, at $29.36 in a 52-week range of $21.40 to $31.15. Shares of Amgen are down about 2.2%, at $104.29 in a 52-week range of $67.61 to $114.95. Shares of Merck are down 1.3%, at $47.16 in a 52-week range of $37.02 to $48.79.

Estimates come from Thomson Reuters and we have added color on each if applicable.

Pfizer Co. (NYSE: PFE) is set to report earnings Tuesday April 30. The drug giant is in the DJIA and is expected to report earnings of $0.56 EPS and $14.0 billion in revenue. Pfizer is within about 2% of a 52-week and multi-year high with a $219 billion market cap.

Merck & Co. Inc. (NYSE: MRK) reports earnings on Wednesday May 1 and shares are within about 2% of multi-year highs. Merck is in the DJIA and earnings are expected to be $0.79 EPS and $11.09 billion in revenue.

Kraft Foods Inc. (NASDAQ: KRFT) is the most recently booted of the former DJIA stocks, but that was due to the split-up of the company to form Mondelez and Kraft as separate companies. We are not giving historic comparisons as analysts are generally very slow to smooth out spin-off data for a couple or few quarters. Estimates are $0.64 EPS on $4.49 billion in revenue.

American International Group Inc. (NYSE: AIG) is a former DJIA stock as well and it is set to report earnings on Thursday, May 2. Earnings are expected to be $0.87 EPS and $8.64 billion in revenue. AIG is within about 3.5% of multi-year post-bailout highs. As a reminder, Uncle Sam owns no more shares and has no more official oversight of AIG’s daily operations outside of tight regulatory monitoring that should be expected for years.

General Motors Co. (NYSE: GM) is another former DJIA component which is listed twice here today but it reports on Thursday, May 2. The big question is whether or not Uncle Sam and the Treasury will sell many more millions of shares as we have been led to believe in recent weeks. GM is expected to report earnings at $0.54 EPS on $36.6 billion in revenue. Expect Europe to remain a huge drag here. Amazingly enough, GM is within 0.5% of a 52-week high now.

On Thursday, May 2 we get International Paper (NYSE: IP) earnings. This is a former DJIA stock that is often forgotten about from the past, but it still has a $20.8 billion market cap. Its earnings are expected to be $0.74 EPS and $7.05 billion in revenue. Shares are about 3% short of a 52-week high.

American Express Co. (NYSE: AXP) is holding its annual meeting on Monday, April 29, 2013. The news we have seen so far is that a vote proposed to split the role of chairman and CEO has failed.

Other DJIA Issues To Watch:

General Motors Company (NYSE: GM) and Ford Motor Co. (NYSE: F) are both former DJIA components and are both set to release April auto sales on Wednesday May 1. Again, GM reports earnings the following day. Ford has already released its earnings.

E. I. du Pont de Nemours and Company (NYSE: DD) is set to have its annual investor meeting on Thursday, May 2. DuPont shares are literally a few cents off of new 52-week highs.

International Business Machines Corporation (NYSE: IBM) has yet to confirm this expected dividend hike we have been waiting for. We named it among the other three dividend hikes of the DJIA stocks expected in April and we expect the company to be aggressive on the dividend front. A hike of only a few percent will not give us much satisfaction because IBM has no organic growth and the company’s dividend yield of 1.7% is pretty pathetic considering the yield of other DJIA and even against DJIA technology stocks.

Altria Group Inc. (NYSE: MO) leads off the Merrill Lynch list. With the Marlboro brand still dominating world markets, Altria’s stock is expected to grow earnings and its dividend. The Merrill Lynch price target is $42. The Thomson/First Call estimate is $36. Altria pays shareholders a strong 4.90% dividend.

E. I. du Pont de Nemours & Co. (NYSE: DD), better known as DuPont, has been one of the dogs of the Dow this year. With an improving domestic and global economy helping earnings, a two-year chart breakout is a very positive sign. The Merrill Lynch target is $68, which would represent a 30% gain. The Wall St. consensus is $55. The stock pays a solid 3.40% dividend.

Macy’s Inc. (NYSE: M) is a leading retailer that makes the grade. It is also benefitting from an improving economy and a consumer that may be back on track, and the stock might be poised to break through 2006-2007 highs. Merrill Lynch has a price objective of $55. The consensus estimate is $46.50. Shareholders are paid a 1.80% dividend.

Merck & Co. Inc. (NYSE: MRK) is another of the dogs of the Dow to make the list. The drug giant announced today a worldwide collaboration on a diabetes drug with rival Pfizer Inc. (NYSE: PFE). The Merrill Lynch price objective on Merck is a move back to 2007 highs at $62. The consensus is $51. Merck pays investors a 3.60% dividend.

Microsoft Corp. (NASDAQ: MSFT) is another mega-cap stock to hit the Merrill Lynch radar. Like most large tech stocks, Microsoft has underperformed the overall market in the past year. Merrill Lynch’s price objective is $37.50, which would represent a breakout from a large 14-year base. The consensus estimate for the stock is $32.20. Shareholders receive a 3.90% dividend.

Monsanto Co. (NYSE: MON) rounds out the Merrill Lynch top names to buy. The company benefits from huge demand for agricultural products, and the stock may be ready for a price breakout back to 2008 levels. Merrill Lynch’s target is $125. The consensus is close at $120. Investors are paid a 1.40% dividend.

Combining solid technical charts with fundamentally strong business models is a great way for investors to hedge their downside risk. Each of the Merrill Lynch stocks is large cap company with a proven track record of success. Companies that will continue to survive even if the market hits a temporary wall.

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.

Citing very attractive stock valuations, despite the dramatic advance of the markets since the low last November, the Jefferies team list of stocks to buy is dominated by the large cap major pharmaceutical names. These stocks may prove to be solid investments for investors, given their liquidity and dividends. The list of pharmaceutical stocks to buy includes these names.

AbbVie Inc. (NYSE: ABBV) is the top pick on the Jefferies list. The analysts raise their price target from $45 to $50. The Thomson/First Call estimate for the stock is quite a bit lower at $37.50. AbbVie pays shareholders a 3.80% dividend.

Abbott Laboratories (NYSE: ABT) has earned a spot on the list. It is trading at less than 10 time earnings, and Jefferies raises its price target to $42 from $40. The Wall St. consensus estimate is $35.50. Investors receive a small 1.50% dividend.

Bristol-Myers Squibb Co. (NYSE: BMY) is a stock to buy. Due to the expanding profit margins and a quality pipeline, Jefferies ups its price target to $45 from $41. The consensus target for the stock is $36.25. Investors receive a 3.40% dividend.

Pfizer Inc. (NYSE: PFE) is another large cap name on the list. It recently received a breakthrough designation from the FDA for an experimental breast cancer pill. The Jefferies price target for Pfizer jumps to $33 from $31, while the consensus target is $31. Shareholders are paid a 3.30% dividend.

Zoetis Inc. (NYSE: ZTS) wraps up the Jefferies list of pharmaceutical stocks to buy. Its recent IPO that has performed extremely well. The price target on the stock is held steady at $40. The consensus price target is $38. Investors receive a tiny 0.80% dividend.

For investors holding other names and perhaps looking to switch, the Jefferies least-preferred stocks in the space are Eli Lilly & Co. (NYSE: LLY) and GlaxoSmithkline PLC (NYSE: GSK) on a valuation basis, and Merck & Co. Inc. (NYSE: MRK), due to its poor run in the research and development of new drugs.

While expecting solid earnings and forward guidance from their stocks to buy, the Jefferies team does not stray very far from their large cap bias. This makes good sense for investors looking to enter the sector because, in theory, it avoids the risks in smaller drug or biotech players. As we have advised recently, due to such a strong move in the markets, readers looking to buy these names may want buy half positions and look for a sell off to add the additional stock at a lower price.