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. Risks 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.