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If you are looking to invest in dividend paying stocks, a good starting point for potential candidates is to analyze those stocks in which short sellers are covering their short positions.

In order to construct this list we looked for stocks with the following characteristics:

  • Dividend yield above 2%
  • Short float above 5%
  • Decrease of the shorted shares over the last four weeks, prior to the benchmark date of May 13th

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


(Click to enlarge)

Considering that the short sellers may be signaling that the upside potential on these names, outweighs the downside: which of these stocks do find most attractive?

1. Regal Entertainment Group (NYSE:RGC): Movie Production, Theaters Industry. Market cap of $1.86B. Dividend yield at 6.98%. Short float at 13.45%. Shorted shares decreased from 20.00M to 17.31M, which is equivalent to 3.13% of the floating shares. The stock is a short squeeze candidate, with a short float at 13.45% (equivalent to 9.61 days of average volume). It's been a rough couple of days for the stock, losing 5.79% over the last week.

2. Ashford Hospitality Trust Inc. (NYSE:AHT): REIT Industry. Market cap of $796.75M. Dividend yield at 3.06%. Short float at 7.76%. Shorted shares decreased from 5.75M to 4.24M, which is equivalent to 2.77% of the floating shares. This is a risky stock that is significantly more volatile than the overall market (beta = 2.62). The stock is a short squeeze candidate, with a short float at 7.76% (equivalent to 10.94 days of average volume). It's been a rough couple of days for the stock, losing 6.71% over the last week.

3. Janus Capital Group, Inc. (NYSE:JNS): Asset Management Industry. Market cap of $1.78B. Dividend yield at 2.09%. Short float at 6.87%. Shorted shares decreased from 16.21M to 12.32M, which is equivalent to 2.16% of the floating shares. This is a risky stock that is significantly more volatile than the overall market (beta = 2.67). Might be undervalued at current levels, with a PEG ratio at 0.87, and P/FCF ratio at 7.06. The stock has performed poorly over the last month, losing 18.1%.

4. World Wrestling Entertainment Inc. (NYSE:WWE): Entertainment Industry. Market cap of $713.20M. Dividend yield at 4.98%. Short float at 12.78%. Shorted shares decreased from 4.01M to 3.48M, which is equivalent to 2.09% of the floating shares. The stock is a short squeeze candidate, with a short float at 12.78% (equivalent to 8.11 days of average volume). It's been a rough couple of days for the stock, losing 5.22% over the last week.

5. CMS Energy Corp. (NYSE:CMS): Diversified Utilities Industry. Market cap of $4.92B. Dividend yield at 4.31%. Short float at 5.1%. Shorted shares decreased from 17.11M to 12.81M, which is equivalent to 1.72% of the floating shares. The stock has gained 37.49% over the last year.

6. Strayer Education Inc. (NASDAQ:STRA): Education & Training Services Industry. Market cap of $1.61B. Dividend yield at 3.05%. Short float at 25.0%. Shorted shares decreased from 3.22M to 3.04M, which is equivalent to 1.54% of the floating shares. The stock is a short squeeze candidate, with a short float at 25.% (equivalent to 11.18 days of average volume). It's been a rough couple of days for the stock, losing 9.46% over the last week. The stock has had a good month, gaining 10.52%.

7. P.F. Chang's China Bistro, Inc. (NASDAQ:PFCB): Restaurants Industry. Market cap of $874.20M. Dividend yield at 2.18%. Short float at 21.22%. Shorted shares decreased from 5.06M to 4.73M, which is equivalent to 1.48% of the floating shares. The stock is a short squeeze candidate, with a short float at 21.22% (equivalent to 9.11 days of average volume). The stock has lost 10.12% over the last year.

8. SUPERVALU Inc. (NYSE:SVU): Grocery Stores Industry. Market cap of $1.84B. Dividend yield at 4.04%. Short float at 18.04%. Shorted shares decreased from 40.79M to 37.86M, which is equivalent to 1.39% of the floating shares. The stock is currently stuck in a downtrend, trading -14.34% below its SMA20, -15.24% below its SMA50, and -9.32% below its SMA200. It's been a rough couple of days for the stock, losing 5.35% over the last week.

9. H&R Block, Inc. (NYSE:HRB): Personal Services Industry. Market cap of $4.81B. Dividend yield at 3.8%. Short float at 7.8%. Shorted shares decreased from 26.37M to 22.74M, which is equivalent to 1.26% of the floating shares. The stock has gained 3.82% over the last year.

10. Meredith Corp. (NYSE:MDP): Publishing Industry. Market cap of $1.37B. Dividend yield at 3.39%. Short float at 21.56%. Shorted shares decreased from 8.40M to 7.91M, which is equivalent to 1.25% of the floating shares. The stock is a short squeeze candidate, with a short float at 21.56% (equivalent to 17.11 days of average volume). The stock has lost 9.08% over the last year.

11. Olin Corp. (NYSE:OLN): Chemicals Industry. Market cap of $1.75B. Dividend yield at 3.65%. Short float at 5.11%. Shorted shares decreased from 5.01M to 4.05M, which is equivalent to 1.21% of the floating shares. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.65%, current ratio at 1.86, and quick ratio at 1.44. It's been a rough couple of days for the stock, losing 5.72% over the last week.

12. J. C. Penney Company, Inc. (NYSE:JCP): Department Stores Industry. Market cap of $7.06B. Dividend yield at 2.6%. Short float at 10.81%. Shorted shares decreased from 21.23M to 19.54M, which is equivalent to 1.15% of the floating shares. The stock is currently stuck in a downtrend, trading -14.86% below its SMA20, -18.2% below its SMA50, and -7.97% below its SMA200. It's been a rough couple of days for the stock, losing 7.11% over the last week.

*Data sourced from Yahoo! Finance and Finviz.

Source: Income Ideas: 12 High Dividend Yield Stocks Being Exited by Short Sellers