This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Does the Annaly Sell-off Create Value Opportunities in REITs?

Stocks in this article: AMT NLY PSA VNO

Chris Lau, Kapitall: Annaly Capital has one of the highest dividends in the industry and is down 30% this year. Are REITs worth a look?

It is not often a good sign to be bullish when a company cuts its dividend. However when Annaly Capital Management (NLY) cut its dividend by 14.3% on December 19, 2013, shares held steady within the $10 price range. 

The likely reason is that investors already anticipated the cut. However now that the dividend is $1.20 per annum and yielding 11.86%, it makes sense to ask whether investors should look at stocks like Annaly as an income investment opportunity?

Annaly is a real estate investment trust (REITs). The company has raised dividends steadily for more than a decade, and has a portfolio of agency mortgage-backed securities.















Value investors might like that Annaly trades at a big discount to book value. According to Kapitall’s number cruncher, Annaly has a book value of $13.66. It now trades at a price to book ratio of 0.7. The company is not the only stock in the sector to sell off, though shares are down nearly 14%, compared to the single digit declines for competitors:

Click on the interactive chart to view data over time.

For the year, Annaly is down 30.3% and this could entice investors holding the company to sell the stock in 2013 to realize losses. However the steep discount to book value in Annaly looks especially attractive in a high-valuation environment, especially among tech stocks. For example, Twitter (TWTR) is trading north of 56 times price to sales and pays no dividend at all.


Rising interest rates are often a cause for concern for the REIT sector, but so far, risks remain muted. The Federal Reserve will taper its stimulus by reducing bond purchase rates to $75 billion, down from $85 billion. The cautious move suggests interest rates will remain exceptionally low throughout 2014.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs