When a stock is heavily shorted, it indicates that those investors believe the stock price will soon fall. Conversely, decreases in shares shorted indicate a bearish change in outlook.
We ran a screen to find optimism from short sellers - we screened dividend stocks for those with the most significant decreases in shares shorted month-over-month.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the 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.
Short sellers believe these names will soon turn around - do you agree? Use this list as a starting point for your own analysis.
List sorted by dividend yield.
1. Darden Restaurants, Inc. (NYSE:DRI): Operates full service restaurant in the United States and Canada. Market cap of $6.01B. Dividend yield at 3.77%, payout ratio at 44.42%. Shares shorted have decreased from 10.13M to 8.39M month-over-month, a change representing 1.35% of the company's 129.34M share float. The stock has gained 1.31% over the last year.
2. PacWest Bancorp (NASDAQ:PACW): Operates as the bank holding company for Pacific Western Bank that provides commercial banking products and services to small to medium size businesses, the owners and employees of those businesses, and households primarily in Southern California. Market cap of $672.73M. Dividend yield at 3.57%, payout ratio at 5.27%. Shares shorted have decreased from 2.21M to 1.91M month-over-month, a change representing 1.02% of the company's 29.30M share float. The stock is a short squeeze candidate, with a short float at 6.27% (equivalent to 7.72 days of average volume). The stock has lost 10.32% over the last year.
3. Cleco Corporation (NYSE:CNL): Engages in the generation, transmission, distribution, and sale of electricity in Louisiana. Market cap of $2.32B. Dividend yield at 3.28%, payout ratio at 34.55%. Shares shorted have decreased from 3.46M to 2.86M month-over-month, a change representing 1.02% of the company's 59.06M share float. The stock has gained 27.98% 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.