Investing

Short Sellers Getting Smart in Defensive High-Yield Dividend Stocks

The short interest data for the September 30 settlement date is out, and we have decided to look at what is happening in the short interest of the go-to high-dividend defensive stocks. It turns out that short sellers have decided to get out of some of the go-to defensive stocks with high-dividend yields. As a reminder, it takes much more conviction to be short a high-yield dividend stock because the seller is also liable for the dividend payments, on top of just paying the cost to borrow shares.

24/7 Wall St. has looked at the current short interest report from the September 30 settlement date and compared it to the September 15 settlement date and prior periods for color. We have also shown what the dividend yield is that short sellers are on the hook for.

Altria Group Inc. (NYSE: MO) saw its short interest drop handily to 16.92 million shares at the end of September, versus 18.611 million shares in mid-September. Altria’s yield is now about 4.5% after a recent hike, and shares just recently hit a new high of $47.10.

AT&T Inc. (NYSE: T) saw a gain of only about 1% in its short interest, up to 213.26 million shares at the end of September from 210.9 million in mid-September. While this seems like a small gain in short selling bets, this was the highest short interest for the telecom giant in a year. AT&T’s dividend yield is at 5.2%, and the stock is still more or less in the middle of its 52-week trading range.

ALSO READ: Apple Slips From 5 Most Shorted Nasdaq Stocks

General Electric Co. (NYSE: GE) saw yet another drop in the short interest, down to 55.9 million as of September 30, versus 60.5 million shares short in mid-September. Amazingly, GE’s short interest is now the lowest it has been in a year. GE may not truly be defensive, but it is the highest dividend among conglomerates, with a 3.5% yield. Trading at $24.78, it has not been challenging the 52-week high of $28.09.

Kimberly-Clark Corp. (NYSE: KMB) saw its short interest fall to 5.244 million shares short at September 30 from 5.359 million shares short on September 15. This is the lowest short interest in a year. The consumer products giant’s dividend is about 3.1%.

Merck & Co. Inc. (NYSE: MRK) saw yet another decline in its short interest — its sixth straight decline. The short interest was 23.06 million shares as of September 30, versus 24.454 million shares on September 15. Yet again, this marked the lowest short interest reading back to January in Merck’s short interest. Merck’s dividend yield is right at 3.1%.

Pfizer Inc. (NYSE: PFE) also saw another drop in the short interest — its fourth drop in a row. Its short interest as of September 30 was 59.973 million shares, versus 64.144 million shares as of September 15. This short interest is drifting lower and moving closer to an average for 2014. Pfizer’s dividend yield is 3.6%, but the $30+ level failed to hold and shares are now just under $29.

ALSO READ: 10 Safest High-Yield Dividends

Procter & Gamble Co. (NYSE: PG) saw a rather large pop higher in the short interest, but it merely reversed the drop seen in the previous period. The September 30 reading was 27.522 million shares short, versus 25.645 million on September 15 and 28.682 million at the end of August. Please note that this is the second highest short interest for P&G this year. P&G’s dividend yield is 3.1%, and at $83.66 the consumer products giant is only about $2 shy of a 52-week high.

Verizon Communications Inc. (NYSE: VZ) saw its short interest pick back up in at the end of September, rising to 44.822 million shares short from 41.61 million shares short in mid-September. This was the highest short interest reading since March. Verizon’s dividend yield is currently almost 4.4%, now that its stock price has fallen almost $5 from its all-time high.

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