<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Last year was marked by the end from a nine year run for the actions that saw the & nbsp;S & amp; P 500& nbsp; achieve a remarkable total return of 259% and earn 10% or more in seven of those nine years. And while 2018 hampered losses by nearly 5%, the stock market remains one of the best ways for people to create wealth. & Nbsp; "data-reactid =" 11 "> Last year, the last nine years ended years for the actions that saw the S & P 500 produce a remarkable total return of 259% and a gain of 10% or more in seven of those nine years. And while 2018 hindered losses by nearly 5%, the stock market remains one of the best ways for people to create wealth.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "In addition, the stock market balances during the last The quarter of the year that ended the uptrend has also created exciting opportunities, including two stocks known for their high dividend yields: & nbsp;Ford Motor Company & nbsp;(NYSE: F) and & nbsp;Trust in Home Properties & nbsp;(NASDAQ: HPT). "data-reactid =" 12 "> In addition, the massive sell-off in the stock market during the last quarter of the year, which put an end to the rise, also created interesting opportunities, including two well-known shares for their investment. high dividend yield: Ford Motor Company (NYSE: F) and Trust of the home properties (NASDAQ: HPT).

A hand drawing scales on a blackboard with risk of one side and reward of the other.

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Source of the image: Getty Images.

In fact, these two have become so attractive that I bought them for the first time recently. Keep reading to find out why I've put my money where my mouth is talking about these two high-yielding stocks.

The value of an acceptable rate of return

I've followed Ford for years, as a fan of its vehicles (I own a Ford car) and seeing the company evolve to the benefit of former CEO Alan Mulally. However, since its departure in July 2014, Ford's total revenues have hardly increased and its profits have dropped by two-thirds:

F Revenue Chart (TTM) Chart

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "F Revenue (TTM) given by YCharts. "data-reactid =" 50 "> F Business Data (TTM) by YCharts.

In addition, investors hurt themselves:

The story continues

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "F given by YCharts"data-reactid =" 69 "> F given by YCharts.

The stock price has dropped by half and, even adding dividends, shareholders have lost about one-third of their investment. At the same time, the opportunity cost of Ford's ownership as the market is becoming a disaster has resulted in underperformance of nearly 86% over the S & P 500.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "So why buy shares in a company likely to continue to to face challenges in important markets like China and Europe ? In short, because at current levels, the quality of its cash flow, the strength of its balance sheet and the price at which you can buy some of it were just too good to be left out. & Nbsp; "data-reactid =" 71 "> So, why buy stocks in a company likely to continue to face challenges in markets as large as China and Europe? In short, because at current levels, the quality of its cash flow, the strength of its balance sheet and its price to buy some of it was just too good to be missed.

F Chart to Free Cash Flow (TTM)

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "F Price to Free Cash Flow (TTM) given by YCharts. "data-reactid =" 85 "> F Price vs. Free Cash Flow (TTM) data by YCharts.

At recent prices, Ford shares are trading at less than 4.8 times free cash flow and 2.3 times operating cash flow. Even after weaker recent results, it only distributes 40% of cash flow to support the basic dividend, and its balance sheet is worth nearly $ 34 billion, largely to protect against the cyclical downturn in demand. cash flow at risk.

All of this put together and I am happy to own Ford at the current valuation and reap a yield of nearly 7%. This is predictably more than unacceptable performance for part of my portfolio and I expect Ford to achieve much better results over time.

Short-term pain for long-term gain

Hospitality Properties Trust has also seen its cash flow weaken in recent years.

HPT CFO per Share (TTM) Chart

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "HPT CFO per share (TTM) given by YCharts. "data-reactid =" 103 "> HPT CFO data per unit (TTM) per YCharts.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "But unlike Ford, which clearly fights in parts of the world , the most profitable market, Hospitality Properties Trust, a real estate investment trust (REIT), which owns hotels and roadside travel centers, operates in an environment characterized by strong demand and a healthy economy. & nbsp; "data-reactid =" 104 "> But unlike Ford, which is clearly struggling in some parts of the world to face weaknesses, demand in North America, its most profitable market, Hospitality Properties Trust, a real estate investment trust (FPI), which owns hotels and roadside travel centers, operates in an environment of high demand and a healthy economy.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "So what gives? in short, the company is taking advantage of the opportunity to reinvest in its properties, combining additional debt and cash flow to fund the renovation of many of its properties, and as CEO John Murray has pointed out: third quarter revenue callhotels under renovation often have lower room rates than hotels that are not under construction. "data-reactid =" 105 "> So, what is happening? In short, the company takes advantage of the opportunity to reinvest in its properties .Used a combination of debt and flow of additional cash to finance the renovation of many of its properties and, as John Murray, third quarter CEO, pointed out on the third quarter results, hotels undergoing renovations often post tariffs rooms lower than hotels not being renovated.

The result is a double-edged sword of reducing cash flow from rooms under renovation and not available for rent and lower rents per night for rooms available in the same property. Not to mention the extra expense of debt.

However, once the renovations are completed, the hotels quickly see the royalty rate reduced and, over time, the renovated properties will almost certainly produce better returns. With hotels accounting for about two-thirds of the minimum rent, this is an important initiative for the long-term health of the company's cash flow.

On the one hand, this should pay off over time. On the other hand, the economic uncertainty associated with excess supply, especially for more upmarket hotels, has cast a cloud over many hotel-focused REITs.

But I expect that, even if we see that these things tarnish HPT's hotel results in the short term, its long-term prospects remain quite solid. In addition, it accounts for about a third of its cash flow from travel centers, and these assets should help offset the cyclical weakness of hotels during economic downturns.

Most importantly, he has a substantial margin of safety in his cash flow to support his dividend:

HPT cash dividend payout ratio (TTM) graph

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<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "HPT Cash Dividend Distribution Ratio (TTM) given by YCharts. "data-reactid =" 124 "> Data of the payment ratio of the cash dividend HPT by YCharts.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "And once the essential of the renovations is The increase in cash receipts and the reduction in capital expenditures should further increase this safety margin, standardized for non-recurring expenses and recent acquisitions, management indicates that only half of normalized expenses operating funds "data-reactid =" 125 "> Once the bulk of the renovation is completed, increased cash flow and reduced capital expenditures should increase this margin of safety Standard for non-recurring expenses recent acquisitions, management indicates that only about half of the normalized operating funds are required to cover the dividend.

<p class = "web-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Negotiation for less than nine times the operational cash flow With With a dividend yield of close to 8% and requiring only about half of the expected 2019 cash flow to maintain the current payment, Hospitality Properties Trust offers an incredible risk profile in terms of performance. best real estate stock idea for 2019. Even if its results suffer in the short term, a sure dividend yield of 7.8% will make it much easier for me to do nothing and wait for the eventual recovery. & Nbsp; "data-reactid =" 126 "> Trader less than nine times With remaining operating cash flow, a dividend of almost 8% and requiring only half of the cash flows expected in 2019 to keep the current payment, Hospitality Properties Trust offers an incredible risk profile in terms of return.My best idea for real estate in 2019. Even if its results suffer in the short term, a safe dividend yield of 7.8% will greatly facilitate my holding on hold and waiting for eventual recovery.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = " More from The Motley Fool "data-reactid =" 127 "> More from The Motley Fool

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Jason Hall holds shares in Ford and Hospitality Properties Trust. The Motley Fool recommends Ford. The Motley Fool has a disclosure policy."data-reactid =" 135 ">Jason Hall owns shares in Ford and Hospitality Properties Trust. The Motley Fool recommends Ford. Motley Fool has a disclosure policy.