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When a stock sees a lot of short selling, it may indicate that short covering is soon on the horizon. Any bump up in stock price can trigger a cascade of short sellers covering their position, causing the stock to rally.

We ran a screen on short squeeze candidates, with short floats above 10%. We screened these stocks for those paying dividend yields above 1%. Finally, we screened for those seeing significant net institutional buying over the current quarter.

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.

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Do you think the smart money is calling it right on these names? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases as a percent of share float.

1. Weight Watchers International, Inc. (NYSE:WTW): Personal Services Industry. Market cap of $4.49B. Dividend yield at 1.15%, payout ratio at 20.28%. Short float at 10.32%. Net institutional shares purchased over the current quarter at 5.4M, which is 15.39% of the company's 35.09M share float. The stock has had a couple of great days, gaining 6.14% over the last week. The stock has performed poorly over the last month, losing 20.92%.

2. Meredith Corp. (NYSE:MDP):
Publishing Industry. Market cap of $917.81M. Dividend yield at 4.03%, payout ratio at 27.05%. Short float at 31.38%. Net institutional shares purchased over the current quarter at 3.9M, which is 10.06% of the company's 38.75M share float. The stock is a short squeeze candidate, with a short float at 31.38% (equivalent to 11.9 days of average volume). The stock has had a couple of great days, gaining 9.18% over the last week.

3. Pep Boys - Manny, Moe & Jack (NYSE:PBY): Auto Parts Stores Industry. Market cap of $525.65M. Dividend yield at 1.20%, payout ratio at 16.92%. Short float at 22.16%. Net institutional shares purchased over the current quarter at 4.1M, which is 10.0% of the company's 41.02M share float. The stock is a short squeeze candidate, with a short float at 22.16% (equivalent to 11.27 days of average volume). The stock has had a couple of great days, gaining 15.11% over the last week.

4. Oxford Industries Inc. (NYSE:OXM): Textile Clothing Industry. Market cap of $567.45M. Dividend yield at 1.51%, payout ratio at 30.26%. Short float at 11.18%. Net institutional shares purchased over the current quarter at 1.1M, which is 7.94% of the company's 13.86M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.31). The stock is a short squeeze candidate, with a short float at 11.18% (equivalent to 6.73 days of average volume). The stock has performed poorly over the last month, losing 12.28%.

5. Prosperity Bancshares Inc. (PRSP):
Regional Banks Industry. Market cap of $1.76B. Dividend yield at 1.86%, payout ratio at 23.74%. Short float at 13.44%. Net institutional shares purchased over the current quarter at 3.1M, which is 7.20% of the company's 43.06M share float. The stock is a short squeeze candidate, with a short float at 13.44% (equivalent to 18.33 days of average volume). The stock has had a couple of great days, gaining 10.19% over the last week.

6. Thor Industries Inc. (NYSE:THO):
Recreational Vehicles Industry. Market cap of $1.24B. Dividend yield at 2.71%, payout ratio at 18.50%. Short float at 10.36%. Net institutional shares purchased over the current quarter at 1.4M, which is 3.69% of the company's 37.95M share float. This is a risky stock that is significantly more volatile than the overall market (beta = 2.01). The stock is a short squeeze candidate, with a short float at 10.36% (equivalent to 6.82 days of average volume). The stock has had a couple of great days, gaining 15.86% over the last week.

*Institutional data sourced from Fidelity, 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: 6 Highly Shorted Dividend Stocks Bought By Smart Money