Some investors love to focus on income investing. One of the best areas in the market is real estate investment trusts (REITs). These companies also either own real estate property as their source of income, or engage in financing real estate, and make their profits off interest rate spreads.

What makes these companies so great for dividends is that due to how they are taxed, 90% of taxable income must be paid out to investors as a dividend. One such REIT that is currently an attractive option is Annaly Capital Management (NYSE:NLY).

What makes Annaly so great?
Annaly borrows money and invests in government-backed pools of fixed-rate mortgages. Its earnings come from the spread that it earns between the yield on assets and cost of borrowings.

Nearly 94% of its portfolio is invested in agency-backed securities. These include collateralized mortgage obligations (CMOs) backed by Freddie Mac, Fannie Mae or Ginnie Mae. Less than a year ago, Annaly was trading around a 52-week low of under $10. Many investors have pre-emptively sold off the stock, worried that as interest rates rise the spread of yield on its assets and borrowing costs will decline. However, it appears that Annaly has been punished way more than other diversified REITs.

The company is currently trading in the mid $11 per share, but still a few points below its 52-week high of $13.99. The current dividend rate for the stock is $1.20 per share, which gives it an attractive yield of 10.31%. You just will not get that yield from other companies. Moreover, while that dividend seems "scary" high, it is actually the lowest it has been in five years.

Insiders are also buying
One indicator that a stock could be on the rise is when an insider buys the stock. When an insider buys stock, it is usually a great indication that the executive believes the stock is undervalued or that it will go up in price.

In November of last year, four different executives from Annaly purchased a little over 2.5 million of the company's outstanding shares. The average price of each of these purchases ranged between the low to mid-$10 range. With the stock currently only trading $1 per share more than this, it could still be a good time to purchase shares.

Mortgage REIT competitors
Two of Annaly's biggest competitors are Capstead Mortgage (NYSE:CMO) and Redwood Trust (NYSE:RWT). Despite the fact that Annaly is down 15% over the last year, both Capstead and Redwood are up around 5% over the same period.

Capstead makes its money from investing in residential mortgage pass-through securities. The majority of these are adjustable-rate mortgages backed by Fannie and Freddie. Meanwhile, Redwood participates in the residential and commercial mortgage markets.

How shares stack up
Annaly continues to trade at a steep discount to its peers. From a value perspective, Annaly appears to be the industry's best play. It trades at just under book value at a P/B ratio of 0.94. Its P/E ratio is the lowest of the three listed at 4.38.

Capstead Mortgage currently has a P/E ratio of 13.28 and a price to book value of 1.04. The dividend rate for Capstead is $1.36, a yield of 10.37%. As for Redwood, the company has a slightly higher P/E ratio of 14.33 and a price to book ratio of 1.28. While the dividend rate of $1.12 is comparable, this is only a yield of 5.85%.

The bottom line
Given that many investors are looking for stocks that offer a dividend, REITs may be a viable option for these investors' portfolios. REITs generally offer a higher yield, which can be very attractive to investors. For investors looking to add a high yield REIT to their portfolio, Annaly Capital is worth a closer look.