If you're looking to generate passive income from your portfolio, Annaly Capital (NYSE: NLY) and its 13% dividend yield is probably one stock that has come across your screen.

The mortgage real estate investment trust (mREIT) allows investors to invest in the U.S. housing market and could be one way to invest in the higher mortgage rates in today's environment. However, the stock is acutely sensitive to interest rates, which have weighed on the business over the past several years. If you're thinking of scooping up Annaly Capital because of its high dividend yield, consider the following first.

Annaly invests in mortgage-backed securities (MBS), pools of residential mortgage loans bundled and sold to investors. Government-sponsored entities, such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), guarantee the principal and interest payments on these mortgage investments, which can help mitigate risk to some degree.

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Source Fool.com