Income investors hate dividend cuts, but here's why they could provide an attractive opportunity in some cases

Morgan Stanley found that six months after slashing dividends, some companies outperform.

Dividend stocks usually take a hit when they decrease their payouts, but investors may not want to count some of them out, according to Morgan Stanley. Companies typically slash dividends as a result of financial strain or in the face of economic headwinds. In the six months following those announcements, history has shown that investors dump the stocks, the bank found.

Almost a year ago, real estate investment trust Annaly Capital Management said it would cut its dividend to 65 cents a share from 88 cents per share, representing a 26% quarter-over-quarter decrease, Morgan Stanley noted. CEO David Finkelstein said in a statement at the time that management was reducing the dividend to be in line with the company's historical yield on book value.

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