5 Dividend Stocks Ignored By Shorts

Includes: CVX, EPD, PM, PPG, RDS.A
by: Francis Fiduk
The market has the highest amount of short interest since November 2010. In order to find strong dividend paying stocks that were ignored by the bears, I ran a screen for stocks that met this criteria:
  • Dividend yield over 3%
  • Over 10% EPS increase over the past 12 months
  • Less than 6% short interest
  • S&P 5 star rating

These are the stocks that met my screen:

Chevron (NYSE:CVX)

  • Share Price: 95.19
  • 52 Week Range: 77.27 – 109.94
  • Dividend: 3.28%
  • Short Interest: 1.33%
  • 1 Year EPS Growth: 80.93%
CVX is in excellent shape on all fronts. It does correlate with the overall market, which means it is now trading at a 10% discount. I wouldn’t dive into CVX all at once as the overall economy could be in for a little more trouble. Cost averaging into CVX over the next few months might work best for defense against a possible economic slowdown.
Enterprise Products Partners (NYSE:EPD)
  • Share Price: 40.71
  • 52 Week Range: 27.85 – 44.35
  • Dividend: 5.94%
  • Short Interest: 1.03%
  • 1 Year EPS Growth: 16.66%
EPD has been trading sideways since about October 2010. Combine that with the speed it rebounded from the uncertainties in August (EPD is down by less than 5% from its 200 day MA) and you’ve got a consistent stock. Any stock that can shake off a month like August is worth a second or third look in my book.

Philip Morris International (NYSE:PM)
  • Share Price: 65.90
  • 52 Week Range: 53.22 – 72.74
  • Dividend: 3.88%
  • Short Interest: 1.69%
  • 1 Year EPS Growth: 21.06%
PM has been trading sideways since about April 2011. Last month’s market put some downward pressure on PM, and may stay on for as long as the overall market is having problems. However, PM’s revenue shouldn’t be impacted because of its international diversification. Asia had 31% net revenue growth for 3 months ending June 2011 compared to June 2010. Latin America and Canada had almost 15% growth in that same period. If sales are impacted in some countries in the EU, Latin America and Canada as well as the Asia segment should more than make up for any losses. I consider PM to be like CVX. The broader market could pull share prices down, but the company should keep running solid.

PPG Industries (NYSE:PPG)
  • Share Price: 73.10
  • 52 Week Range: 68.70 – 97.81
  • Dividend: 3.12%
  • Short Interest: 3.19%
  • 1 Year EPS Growth: 128.32%
PPG’s EPS has grown by an amazing 128% over the past 12 months, however its share price in the past 12 months has only grown by 3.3%. PPG took a big hit in July and August, losing 22.1% in that timeframe. PPG looks like a bargain to me; It’s only trading at 11.5 P/E leaving plenty of room for possible share price growth.

Royal Dutch Shell (NYSE:RDS.A)
  • Share Price: 63.82
  • 52 Week Range: 55.93 – 77.97
  • Dividend: 5.26%
  • Short Interest: 0.13%
  • 1 Year EPS Growth: 60.51%
The first thing that sticks out to me is the ridiculously small short interest. When no one is brave enough to short, it’s usually a good indicator that this stock is going to rise. RDS.A is trading at a bargain last seen in November 2010. The only current downside to this stock is its lack of short interest. Should RDS.A suddenly become victim to people or funds needing liquidity, the lack of short sellers could cause a freefall as there won’t be anyone taking profits on shorts. This tells me buyers of RDS.A should plan on holding for several years at a minimum. If RDS.A ends up losing a lot of share value, it should mean it’s a good time to accumulate.

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

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