24/7 Wall St.

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.

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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.

Kimberly-Clark Corp. (NYSE: KMB) witnessed a large drop of 7% in its short interest at the end of May, falling to 5,317,197 shares short from 5,719,484 shares in mid-May. This stock’s yield is down to 3% now that its shares are at $111. Apparently Kimberly-Clark short sellers got tired of this rising, because the end of May had the lowest short interest in a year. This stock is now valued at 18 times current year earnings per share expectations.

Merck & Co. Inc. (NYSE: MRK) is now within 2% of a 52-week and multiyear high. Short sellers got out of the way here, as the short interest fell by almost 5% to 29,199,196 shares at the end of May from 30,708,772 shares short in mid-May. Merck’s dividend yield is 3.0%, and it is valued at a somewhat expensive 17 times expected 2014 earnings.

Pfizer Inc. (NYSE: PFE) saw its short interest fall by more than 5%, down to 56,694,370 shares short at the end of May from 59,856,772 shares short in mid-May. Pfizer’s yield is up to 3.5% now that its stock has pulled back under $30 on worries that it will make an expensive overseas acquisition. Pfizer is valued at only 13 times expected 2014 earnings.

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Procter & Gamble Co. (NYSE: PG) had the largest short interest drop of all among these high-yield dividend stocks. The May 30 settlement date saw 15,531,412 shares in the short interest, down a sharp 12.7% from the 17,794,800 shares short on May 15. Just like rival Kimberly-Clark, this is the smallest short interest in P&G shares in a year. P&G’s dividend yield is 3.2%. With a June year-end, we blended the earnings estimates for 2014 and 2015, and P&G also trades at an expensive 18.3 times expected earnings.

Verizon Communications Inc. (NYSE: VZ) saw a small 2.8% drop in its short interest, with some 36,337,821 shares in the May 30 short interest, versus 37,381,129 shares short on May 15. Verizon’s dividend yield is currently much lower than AT&T’s at 4.3%, and Verizon trades at about 14 times expected 2014 earnings.