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Short squeeze opportunities arise when a stock becomes highly shorted. As there are fewer short sellers to sell the stock, any move up can trigger a short squeeze in which short sellers must close out their positions, which puts even more upward pressure on the stock price.

We searched for potential short squeeze opportunities by screening large-cap dividend stocks (paying dividend yields above 2%) for those that have seen significant increases in short selling month-over-month.

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.



Do you think these stocks may soon experience a short squeeze? Use this list as a starting-off point for your own analysis.

List sorted by dividend yield.

1. Dominion Resources, Inc. (D):
Electric Utilities Industry. Market cap of $27.99B. Dividend yield at 4.05%, payout ratio at 34.77%. Shares shorted have increased from 13.31M to 15.32M shares month-over-month, a change representing 0.35% of the company's 573.41M share float. The stock has gained 29.59% over the last year.

2. Edison International (EIX): Electric Utilities Industry. Market cap of $12.60B. Dividend yield at 3.31%, payout ratio at 33.85%. Shares shorted have increased from 2.03M to 2.79M shares month-over-month, a change representing 0.23% of the company's 325.03M share float. The stock has gained 27.04% over the last year.

3. The Dow Chemical Company (DOW):
Chemicals Industry. Market cap of $42.67B. Dividend yield at 2.75%, payout ratio at 31.52%. Shares shorted have increased from 12.61M to 17.02M shares month-over-month, a change representing 0.38% of the company's 1.17B share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.27). The stock has gained 60.76% over the last year.

4. Wal-Mart Stores Inc. (WMT): Discount, Variety Stores Industry. Market cap of $185.40B. Dividend yield at 2.73%, payout ratio at 29.22%. Shares shorted have increased from 31.80M to 36.50M shares month-over-month, a change representing 0.27% of the company's 1.76B share float. The stock has gained 12.71% over the last year.

5. Analog Devices Inc. (ADI):
Semiconductor Industry. Market cap of $11.82B. Dividend yield at 2.53%, payout ratio at 29.83%. Shares shorted have increased from 5.98M to 6.75M shares month-over-month, a change representing 0.26% of the company's 293.75M share float. The stock has gained 45.13% over the last year.

6. Carnival plc (CUK): General Entertainment Industry. Market cap of $31.29B. Dividend yield at 2.53%, payout ratio at 6.73%. Shares shorted have increased from 446.28K to 505.27K shares month-over-month, a change representing 2.11% of the company's 2.80M share float. The stock has gained 22.61% over the last year.

7. Target Corp. (TGT): Discount, Variety Stores Industry. Market cap of $32.77B. Dividend yield at 2.52%, payout ratio at 24.0%. Shares shorted have increased from 9.58M to 11.80M shares month-over-month, a change representing 0.32% of the company's 688.35M share float. The stock has lost 2.94% over the last year.

8. Gap Inc. (GPS): Apparel Stores Industry. Market cap of $10.0B. Dividend yield at 2.48%, payout ratio at 21.80%. Shares shorted have increased from 26.90M to 33.11M shares month-over-month, a change representing 1.42% of the company's 436.87M share float. The stock has lost 4.17% over the last year.

9. Lowe's Companies Inc. (LOW): Home Improvement Stores Industry. Market cap of $30.57B. Dividend yield at 2.39%, payout ratio at 30.72%. Shares shorted have increased from 10.28M to 14.85M shares month-over-month, a change representing 0.35% of the company's 1.30B share float. The stock has gained 19.92% over the last year.

*Short data sourced from Yahoo! Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 9 Large-Cap Dividend Stocks Being Targeted by Short Sellers