Short Interest Swings in High-Yield Dividend Stocks

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The short interest data are out for the August 15 settlement date. 24/7 Wall St. reviews the higher-yield defensive dividend stocks for a sense of what short sellers may be thinking.

As we have said a number of times, short selling a high-dividend stock takes much more courage and conviction than short selling growth stocks or other stocks with no dividends. Besides being short a stock and having to pay borrowing costs to a brokerage firm, short sellers effectively assume the liability of paying out that dividend as well.

Altria Group Inc. (NYSE: MO) saw its short interest rise marginally, with the mid-month short interest at 19.124 million shares, versus 18.94 million shares short as of July 31. Altria’s yield is now about 4.7%, and the stock rose about 4% during the two-week period, and less than 2% since. Shares closed at $42.86 Tuesday, in a 52-week range of $33.54 to $43.70.

AT&T Inc. (NYSE: T) had a rise in its short interest that more than reclaimed the decline in the previous period. Some 205.44 million shares were short as of the mid-month settlement date, up from 196.91 million shares short in the prior report. AT&T’s dividend yield is 5.2%, and its shares retreated marginally during the period. Shares ended Tuesday at $34.50, in a 52-week trading range of $31.74 to $37.48.

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General Electric Co. (NYSE: GE) shares short rose to their highest level since March. The 71.44 million shares short were up from 67.20 million shares in the previous period. GE’s common stock dividend yield is about 3.5%. The stock rose about 2% during the two-week period and a little more since. Shares closed at $26.01 on Tuesday, in a 52-week range of $22.92 to $28.09.

Kimberly-Clark Corp. (NYSE: KMB) saw its third consecutive drop in the short interest, falling to 5.68 million shares as of August 15, versus 6.25 million shares short as of July 31. The consumer products giant’s dividend yield is back to 3.2%. After short sellers watched the share price gain more than 3% during the period, it has hardly risen since. Shares closed at $108.13, in a 52-week range of $91.44 to $114.45.

Merck & Co. Inc. (NYSE: MRK) saw its third straight drop in the short interest to its lowest level since February. The number of shares short was 27.77 million as of August 15, versus 33.50 million as of July 31. Merck’s dividend yield is right at 3.1%. Shares initially dropped during the settlement period, but ended the two weeks 3.3% higher. The stock reached a new multiyear high of $60.58 on Wednesday.

Pfizer Inc. (NYSE: PFE) has seen volatility in its short interest of late, but this latest reading was a drop from the highest of 2014 by far. The July 31 short interest was 72.619 million shares, versus 65.90 million shares by mid-August. During that time, Pfizer shares slipped a bit, but they have risen about 2% since to close Tuesday at $29.21. The 52-week range is $27.76 to $32.96, and the dividend yield is near 3.6%.

Procter & Gamble Co. (NYSE: PG) had a short interest gain of about 7%, rising from 25.16 million shares to 26.90 million, in early August. That was the greatest number of shares short in at least a year. The dividend yield is 3.2%, and shares climbed about 5.7% in the period, and they are up about 2% more since. The stock ended Tuesday at $83.38, in a 52-week range of $73.61 to $85.82.

Verizon Communications Inc.‘s (NYSE: VZ) short interest rose to its highest level since April. But that 41.46 million shares short in mid-August was only about 1% of the float. Verizon’s dividend yield is currently 4.2%. The stock retreated about 3.2% during the two weeks, and shares now are trading in the same neighborhood as at the beginning of the year. Trading just above $49, the stock has a 52-week range of $45.08 to $53.66

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