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The most common and sustainable source for companies to pay dividends is through free cash flow. Although companies could use cash reserves from prior periods or even borrow money to continue paying their dividend, free cash flows are the “long-lasting” source.

With this idea in mind, we screened high-yield stocks (with dividend yields above 3%) for those that have high free cash flow per share relative to their stock price (with P/FCF under 10). This not only indicates that the company has a healthy amount of free cash flow to pay dividends, but also may indicate an undervalued opportunity.

On top of this screen, we searched for stocks that have also seen significantly bullish changes in put/call ratio over the last ten trading days.

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 pay reliable dividends? Use this list as a starting-off point for your own analysis.

List sorted by decrease in put/call over the last two weeks.

1. Guangshen Railway Co. Ltd. (NYSE:GSH): Railroads Industry. Market cap of $2.98B. Dividend yield at 3.30%. P/FCF at 5.78. Put/call ratio decreased 29.71% over the last 10 trading days (from 3.5 to 2.46). The stock appears to have good liquidity to back it up - dividend yield at 3.3%, current ratio at 1.6, and quick ratio at 1.5. The stock has gained 20.72% over the last year.

2. Glacier Bancorp Inc. (NASDAQ:GBCI): Regional Banks Industry. Market cap of $966.60M. Dividend yield at 4.8%. P/FCF at 3.02. Put/call ratio decreased 26.09% over the last 10 trading days (from 0.46 to 0.34). The stock is a short squeeze candidate, with a short float at 9.06% (equivalent to 16.58 days of average volume). The stock has lost 9.13% over the last year.

3. Sun Life Financial Inc. (NYSE:SLF): Life Insurance Industry. Market cap of $17.46B. Dividend yield at 4.93%. P/FCF at 4.49. Put/call ratio decreased 26.0% over the last 10 trading days (from 0.5 to 0.37). The stock has gained 15.41% over the last year.

4. Sinclair Broadcast Group Inc. (NASDAQ:SBGI): Broadcasting Industry. Market cap of $872.64M. Dividend yield at 2.2%. P/FCF at 8.47. Put/call ratio decreased 17.50% over the last 10 trading days (from 0.4 to 0.33). The stock is a short squeeze candidate, with a short float at 6.03% (equivalent to 5.43 days of average volume). The stock has had a good month, gaining 14.8%.

5. Sinopec Shanghai Petrochemical Co. Ltd. (NYSE:SHI): Oil and Gas Refining and Marketing Industry. Market cap of $3.26B. Dividend yield at 3.42%. P/FCF at 5.3. Put/call ratio decreased 8.12% over the last 10 trading days (from 1.97 to 1.81). The stock has gained 23.88% over the last year.

6. Manulife Financial Corporation (NYSE:MFC): Life Insurance Industry. Market cap of $31.30B. Dividend yield at 3.06%. P/FCF at 3.04. Put/call ratio decreased 6.17% over the last 10 trading days (from 0.81 to 0.76). This is a risky stock that is significantly more volatile than the overall market (beta = 2.03). The stock has gained 18.57% over the last year.

7. Huaneng Power International Inc. (NYSE:HNP): Electric Utilities Industry. Market cap of $6.37B. Dividend yield at 5.77%. P/FCF at 2.28. Put/call ratio decreased 5.38% over the last 10 trading days (from 1.3 to 1.23). The stock has lost 8.09% over the last year.

8. Lincoln Educational Services Corporation (NASDAQ:LINC):
Education and Training Services Industry. Market cap of $438.73M. Dividend yield at 5.15%. P/FCF at 6.92. Put/call ratio decreased 3.78% over the last 10 trading days (from 1.85 to 1.78). Exhibiting strong upside momentum - currently trading 12.89% above its SMA20, 19.85% above its SMA50, and 25.95% above its SMA200. The stock has had a couple of great days, gaining 13.29% over the last week.

9. M&T Bank Corp. (NYSE:MTB): Regional Banks Industry. Market cap of $10.99B. Dividend yield at 3.20%. P/FCF at 8.17. Put/call ratio decreased 3.13% over the last 10 trading days (from 0.64 to 0.62). The stock has gained 0.32% over the last year.

*Options data sourced from Schaeffer’s, 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: High-Yield Dividend Stocks With Bullish Options Sentiment, Undervalued to Free Cash Flow