Short sellers are continuing to keep their bets against many of the top defensive high-yield dividend stocks. Increased volatility in June and rising interest rates are obviously making short sellers get aggressive in some cases and lower their bets in other cases. The latest short interest covers the June 28 settlement date, and we have compared this to the June 14 settlement date. We also have added color if appropriate.
The top dividend stocks we are tracking in the short interest are as follows: 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) saw yet another drop in the short interest, by 6.8%, to 17,512,090 shares short as of June 28, versus 18,785,495 shares as of June 14. The short sellers keep disappearing against big tobacco here. Altria yields only about 4.9% as of now, because shares are up around $37 again.
American Electric Power Co. Inc. (NYSE: AEP) previously saw only an 8% gain or so in the short interest, but the short interest grew a sharp 30.7% to 4,274,596 shares as of June 28, versus 3,271,196 shares as of June 14. The dividend yield is now about 4.4% as the stock has tried to base after a sell-off of more than 10% in its share price.
Annaly Capital Management Inc. (NYSE: NLY) generally has seen a rise in the short interest, even though last period’s was down, but this report showed a gain of about 2% to 37,388,702 shares short, versus 36,691,015 shares in the prior report. Mortgage REITs have been getting slammed, but short sellers have to be short that double-digit yield as well. Annaly is down sharply from its highs but still has an indicated 13%+ yield.
AT&T Inc. (NYSE: T) saw a gain of about 4% in the short interest to 76,909,012 shares as of June 28, versus 73,910,122 as of June 14. AT&T’s dividend is 5.1% and is the highest yield of all 30 DJIA stocks.
Duke Energy Corp. (NYSE: DUK) tracked AEP with a higher short interest as investors worry about rising rates and utilities. The short interest rose almost 22% to 7,070,415 shares, versus 5,812,049 shares as of June 14. Duke has a dividend yield of about 4.6%, and it just raised its dividend.
General Electric Co. (NYSE: GE) is the highest yielding conglomerate, but short sellers have been undecided here. This is the second change of under 1% since previously seeing a 10% drop in the short interest. GE’s short interest fell to 84,660,906 shares as of June 28, versus 83,904,978 shares as of June 14. GE shares come with a dividend yield of 3.2%.
Kimberly-Clark Corp. (NYSE: KMB) added again in the short interest with a 5% gain on top of a prior 14% gain in the short interest. The June 28 short interest was 8,330,897 shares, versus 7,935,659 shares short as of June 14. The consumer products giant’s dividend yield is about 3.3%.
Kinder Morgan Energy Partners L.P. (NYSE: KMP) generally has risen, and this report showed a gain of more than 8%: 3,017,578 units versus 2,790,105 units short. Its dividend is actually a distribution and now is back down to the equivalent of about 6%.
Big Pharma short changes: Merck & Co. Inc. (NYSE: MRK) saw another drop of close to 10% in its short interest: 9.9% to 74.07 million shares as of June 28, versus 82.26 million as of June 14. Pfizer Inc. (NYSE: PFE) has continued to see its short interest rise, likely as a result of a spin-out: what was previously a more than a doubling of the short interest was followed with another gain of more than 50% to 335.5 million shares short as of June 28, versus 218.2 million as of June 14. Merck has a yield of 3.6%, versus Pfizer’s yield of 3.4%.
Procter & Gamble Co. (NYSE: PG) had previously seen a 12.5% drop in the short interest and now that was taken back as the gain was about 12.8% in the new short interest report: 22,330,179 shares short as of June 28, versus 19,790,665 shares short as of June 14. P&G’s dividend is down to 3% now that shares have recovered.
Reynolds American Inc. (NYSE: RAI) followed Altria with a lower short interest: down almost 6% to 9,807,269 shares short as of June 28, versus 10,405,705 shares short as of June 14. Reynolds has a yield of about 5.0% now that shares hit a new 52-week high.
Verizon Communications Inc. (NYSE: VZ) saw its short interest drop from the prior report disappear, and it gained even more than AT&T: -7% to 48,445,844 shares short as of June 28, versus 45,283,121 shares short as of June 14. Verizon’s dividend yield is currently much lower than AT&T’s at 4%.