We like high dividend stocks and consider them as alternatives to 10-year Treasury bonds. Like Jim Rogers and Ray Dalio, we are concerned about Fed’s inflationary monetary policy and want to protect ourselves against inflation. One of the ways of doing this without assuming significant risks is investing in high dividend stocks.
High dividend stocks are usually safer but under some circumstances they might be extremely dangerous. The vulnerable high dividend yielding companies may be targeted by short sellers. So, high short interest in high dividend stocks may signal danger.
Since we are a source for free insider trading data, we compiled this list of stocks that have at least a 5% dividend yield and a minimum of 5% open short interest. We also require that the short interest has been increasing compared to the previous month. These stocks may be substantially riskier than other high dividend yielding stocks:
Company Name Symbol Dividend Yield (%)
HATTERAS FINANCIAL HTS 14.1
FIFTH STREET FINANCE FSC 9.6
PDL BIOPHARMA PDLI 9.3
FRONTIER COMM. FTR 9.1
VECTOR GROUP VGR 8.7
FRONTLINE LTD FRO 8.4
GETTY REALTY CORP. GTY 7.6
NORDIC AMERICAN TANKER NAT 7.4
CAL MAINE FOODS INC CALM 6.5
MEDICAL PROPERTIES TRUST MPW 6.5
REDWOOD TRUST INC. RWT 6.3
OVERSEAS SHIPHOLDING OSG 6.3
REGAL ENTERTAINMENT RGC 6.1
PITNEY BOWES INC. PBI 6.0
NEW YORK COMMUNITY BANCORP NYB 6.0
ENTERTAINMENT PROPERTIES EPR 5.9
NATIONAL RETAIL PROPERTIES NNN 5.8
PEPCO HOLDINGS INC. POM 5.6
PARK NATIONAL CORP PRK 5.4
UIL HOLDINGS CORP UIL 5.4
HEALTHCARE REALTY TRUST HR 5.3
RAMCO-GERSHENSON PROPERTIES RPT 5.1
CINCINNATI FINANCIAL CINF 5.1
VALLEY NATIONAL BANCORP VLY 5.0
High dividend stocks usually beat the market on the average. Unfortunately, these 24 stocks returned 3.1% over the past 52 weeks, including dividend payments. S&P 500 index returned more than 15% during the same time frame. Twelve of the top 15 high dividend stocks in this list underperformed the market.
The companies in this list are mainly real estate trusts, financials, and shipping companies. Some of these companies are favored by prominent hedge fund managers. PDL Biopharma is in Jim Simons’ and Seth Klarman’s portfolios. I would think twice about shorting any company that Seth Klarman is bullish about. Glenview’s Larry Robbins is very bullish about PBI. He had $87 Million in this stock. Leon Cooperman’s Omega Advisors and Roberto Mignone’s Bridger had Regal Entertainment in their portfolios. The other companies aren’t really favored by hedge funds, so they may be considered as short candidates.
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