BALTIMORE ( Stockpickr) -- When times are tough, it's no surprise that investors flock to dividend stocks, seeking to grow their portfolios through high yields when capital gains aren't cooperating. But not everyone's a fan of dividend-paying stocks -- in fact, many are being actively shorted by investors who are hoping to profit from a decline in share price.In some ways, dividend stocks have a lot to lose. With the emphasis placed on their dividend payouts, failure to meet investors' income expectations can have a gory impact on a stock's share price. But well-positioned dividend stocks are tough to bet against in the long term for the very same reason; investors are loath to sell an income payer as long as the stock is consistently paying out its income to investors. For those reasons, some of the best short-squeeze opportunities can be found among high-yielding dividend stocks. Related: Warren Buffett's 10 Highest-Yielding Stocks A short squeeze is the buying frenzy that ensues when a heavily shorted stock starts to look attractive again to investors, causing share price to skyrocket. One of the best indicators of just how high a short-squeezed stock could go is the short interest ratio, which estimates the number of days it would take for short-sellers to cover their positions. The higher the short ratio, the higher the potential profits when the shorts get squeezed. Naturally, these three plays aren't without their blemishes -- there's a reason that these stocks are being heavily shorted. But for investors looking for exposure to a speculative play with a beefier risk/reward tradeoff, these could be powerful upside plays for the coming year. With that, here's a look at high-yield stocks with short squeeze potential in 2011.
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