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Do you prefer stocks that pay part of their return in dividend income? For ideas on how to start your own dividend search, we ran a screen.

We began by screening for stocks paying dividend yields above 2% and sustainable payout ratios below 50%. We then screened for those that also appear undervalued relative to earnings growth, with PEG below 1.

Finally, we screened for those with bullish sentiment from short sellers, with significant decreases in shares shorted month-over-month representing at least 1.5% of share float. This indicates that short sellers are less bearish on these names than they were a month ago.

(click to enlarge)

Tool provided by Kapitall.

Do you think these stocks will outperform like short sellers expect? Use this list as a starting point for your own analysis.

List sorted by decrease in shares shorted month-over-month as a percent of share float.

1. GameStop Corp. (NYSE:GME): Operates as a retailer of video game products and personal computer entertainment software. Market cap at $2.53B, most recent closing price at $19.20. Dividend yield at 3.12%, payout ratio at 5.96%. Shares shorted have decreased from 64.17M to 59.92M over the last month, a decrease which represents about 3.27% of the company's float of 129.80M shares. Days to cover ratio at 15.99 days.

2. Jefferies Group, Inc. (JEF): Operates as a securities and investment banking company in the Americas, Europe, and Asia. Market cap at $2.66B, most recent closing price at $12.92. Dividend yield at 2.32%, payout ratio at 26.46%. Shares shorted have decreased from 10.67M to 6.22M over the last month, a decrease which represents about 2.15% of the company's float of 207.25M shares. Days to cover ratio at 3.04 days.

3. Textainer Group Holdings Limited (NYSE:TGH): Engages in the purchase, ownership, management, leasing, and disposal of intermodal containers worldwide. Market cap at $1.6B, most recent closing price at $32.37. Dividend yield at 4.94%, payout ratio at 33.00%. Shares shorted have decreased from 1.12M to 880.71K over the last month, a decrease which represents about 1.9% of the company's float of 12.61M shares. Days to cover ratio at 5.8 days.

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

Source: 3 Undervalued Dividend Stocks With Bullish Short Trends