Short sellers have increased their bets against the stable high-dividend stocks that are in most Americans’ retirement accounts and mutual funds. In fact, the mid-September short interest saw year highs in many cases. Only a few of our key dividend holdings saw the short interest decline compared to the end of August.
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 August 30 versus September 13 and added color on each.
Altria Group Inc. (NYSE: MO) saw another boost in the short interest to 18.96 million shares from 18.03 million shares. This was the highest reading back to May. Altria’s yield is back up to about 5.4%, as the shares are down around $35 again.
American Electric Power Co. Inc. (NYSE: AEP) saw another jump in its short interest to 5.52 million shares from 5.15 million. This was the highest reading on short interest back to last October. AEP yields about 4.5% now that shares are under $45 again.
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 screamed up to 50.7 million shares short, versus 43.8 million shares short inthe prior period. This was the highest short interest in more than a year. Annaly Capital still screens as a double-digit yield around 11.7%.
AT&T Inc. (NYSE: T) saw its short interest surge in the double digits, up to 121.5 million from 106.5 million shares. This was the sixth gain in the short interest and the third of more than 100 million shares. Oh, and it was the highest short interest in a year. AT&T’s dividend is 5.2%, now that its stock is back to almost $34, and it has the highest yield of all 30 Dow Jones Industrial Average stocks.
Duke Energy Corp. (NYSE: DUK) saw a gain to 8.5 million shares from 7.84 million shares previously. This was the highest reading in about six months. Duke has a dividend yield of about 4.6%.
General Electric Co. (NYSE: GE) is the highest yielding conglomerate, and the short interest here ticked up as well, to 69.8 million shares from 67.8 million . GE shares come with a dividend yield of 3.2%, and shares are within 3% of multiyear highs.
Kimberly-Clark Corp. (NYSE: KMB) saw a minor drop in short selling, but only to 9.56 million shares from 9.71 million. This was still the second highest short interest reading of 2013 for the consumer products giant. Its yield is about 3.4%.
Kinder Morgan Energy Partners L.P. (NYSE: KMP) saw another gain in the short interest, up to 3.256 million shares (units) from 3.12 million at the last report. Its dividend is actually a distribution and is back down to the equivalent of about 6.6%, now that the unit price is less than $80, versus a high of $92.99.
Big Pharma short changes: Merck & Co. Inc. (NYSE: MRK) saw its short interest drop to 34.05 million shares from 38.6 million. Pfizer Inc. (NYSE: PFE) saw its short interest drop to 56.88 million shares from 62.2 million at the prior report. Merck has a yield of almost 3.6%, versus Pfizer’s yield of 3.3%.
Procter & Gamble Co. (NYSE: PG) saw a small drop to 19.19 million shares short from 19.76 million at the last report. P&G’s short interest is one of the few that has been in decline, and its dividend is about 3%.
Reynolds American Inc. (NYSE: RAI) saw a its short interest rise marginally to 7.59 million from 7.48 million shares. Reynolds has a yield of 5.0%.
Verizon Communications Inc. (NYSE: VZ) saw a surge in in its short interest to 58.7 million shares, versus the 47.59 million shares in the previous period. This was the highest short interest at Verizon back to March. Verizon’s dividend yield is currently much lower than AT&T at 4.4%.
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