Ready to jump on the dividend bandwagon and start collecting big, fat quarterly payouts? Caveat emptor: just because a stock has a high dividend yield doesn't necessarily mean it will yield you a dime.

Dividend yield compares how much a company pays out in dividends relative to its price per share -- so while a high dividend yield might mean more bang for your buck, it could also be owed to a sharp drop in stock price.

And don't automatically assume that a stock's low price is a buy opportunity -- because there's probably a very good reason for the decline. If you're not careful, high-yield dividend investing can turn into a game where the potential returns are dwarfed by the risks -- catching falling knives, so to speak.

That said, extreme investor pessimism can sometimes push a stock below fair value, creating opportunities for contrarian investors who like to go against the crowd.

To help you find contrarian ideas, we've compiled a list of high-dividend-yield stocks being targeted by short-sellers and options traders. Short-sellers have to be a lot savvier than the average investor, so it's a good idea to have a look at their trades. Because short-sellers sell high to buy low, they actually benefit from a decline in shares, and all of the stocks in our list have seen an increase in shorted shares over the last three months.

Like short-selling, options trading requires a higher level of sophistication than investors typically have. Options traders bid on the future right to buy or sell a stock at a pre-determined price, taking on a huge amount of risk in the process. So it's not a bad idea to pay attention to their trades.

For our list, we're only focusing on high-yield stocks with a large put option contract open interest relative to call option open interest, a signal of bearish sentiment in the options market.

Are you willing to chase the dividend yield and take a contrarian stance on some of these names? Or is the risk too great to justify the dividend returns? (Click here to access free, interactive tools to analyze these ideas.)

For each stock, we'll list the short ratio, which shows the total shares shorted as a multiple of the average daily volume. In other words, the short ratio shows how many days of average volume are needed to cover all short positions. We'll also list the trend in shares shorted, call option open interest and put option open interest.

Short float data sourced from AOL Money, and options data sourced from Schaeffer's.

Company

Dividend Yield

Short Trends Between 6/15 and 9/15

Option Market Sentiment

CNinsure (Nasdaq: CISG)

4.47%

Short ratio has increased from 1.1 to 6.5 days, with shares shorted increasing from 401,137 to 3.22M Call option open interest at 2,516 contracts vs. 8,128 put option contracts (Put/Call ratio of 3.23)
Calumet Specialty Products Partners (Nasdaq: CLMT)

8.86%

Short ratio has increased from 1.4 to 2.0 days, with shares shorted increasing from 189,773 to 225,685 Call option open interest at 3,425 contracts vs. 9.159 put option contracts (Put/Call ratio of 2.67)
Microchip Technology (Nasdaq: MCHP)

4.40%

Short ratio has increased from 5.4 to 8.4 days, with shares shorted increasing from 18.01M to 21.48M Call option open interest at 10,184 contracts vs. 23,337 put option contracts (Put/Call ratio of 2.29)
DPL (NYSE: DPL)

4.48%

Short ratio has increased from 2.6 to 6.4 days, with shares shorted increasing from 3.18M to 4.46M Call option open interest at 168 contracts vs. 316 put option contracts (Put/Call ratio of 1.88)
Linn Energy (Nasdaq: LINE)

7.66%

Short ratio has increased from 1.3 to 2.6 days, with shares shorted increasing from 1.63M to 2.37M Call option open interest at 8,363 contracts vs. 12,231 put option contracts (Put/Call ratio of 1.46)
Mine Safety Appliances (NYSE: MSA)

3.73%

Short ratio has increased from 12.5 to 17.1 days, with shares shorted increasing from 1.97M to 1.99M Call option open interest at 521 contracts vs. 700 put option contracts (Put/Call ratio of 1.34)
Johnson & Johnson (NYSE: JNJ)

3.41%

Short ratio has increased from 1.3 to 2.9 days, with shares shorted increasing from 23.64M to 31.16M Call option open interest at 100,771 contracts vs. 117,160 put option contracts (Put/Call ratio of 1.16)

Interactive Chart: Press Play to see how the dividend yields have changed for all the stocks mentioned above.


Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

Johnson & Johnson is a Motley Fool Income Investor recommendation. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. The Fool owns shares of Johnson & Johnson. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.