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Marty Fridson is a leading specialist in income investing strategies. Here, the editor of Forbes/Fridson Income Securities Investor reviews two energy stocks for dividend investors.

Exxon Mobil Corp. (XOM) is one the world’s largest oil and gas providers and ranks as one of the largest integrated refiners and marketers of petroleum products. XOM’s conservative risk profile throughout varying business cycles and its extensive portfolio of resources have enabled it to maintain strong debt ratings.

We initially recommended XOM’s common shares for low- to medium-risk taxable portfolios in August 2020. Our recommendation was made during the height of the pandemic, amid depressed energy prices. The company made the necessary capital expenditure cuts in order to preserve its common dividend during the period. XOM opted in late 2021 to make a small increase to its quarterly distribution.

The company continues to maintain a strong liquidity and capital position, further helped by sharply improved demand and higher prices for energy products. XOM reported exceptionally strong Q1 2022 adjusted earnings results, aided by sharply improved energy demand and significantly higher prices, as well as continued growth from its Permian and Guyana oil resources.

Adjusted net income of $8.83 billion more than tripled from a year ago. Earnings per share of $2.07 nevertheless missed analysts’ $2.25 estimates. However, total revenues of $90.5 billion exceeded estimates of $88.9 billion, jumping 55.8% from a year earlier. While lower than expected earnings were attributed to a decline in oil-equivalent production, higher commodity prices and improved refining margins were partially offsetting factors.

We continue to recommend XOM common stock for low- to medium-risk taxable portfolios. Dividends are taxed at the 15%-20% tax rate. With this corporate update we are raising XOM’s fair value price to $115 from $55, for a 3.06% current yield.

NextEra Energy Partners, LP (NEP) is an MLP that was formed by NextEra Energy, Inc. (NEE), a leading energy provider and one of the largest utility holding companies. NEP acquires, manages, and owns clean energy projects with stable and long-term cash flows. The partnership owns interests in wind and solar projects in the United States.

We currently recommend NEP as a Buy for medium-risk taxable portfolios. Although NEP operates as a limited partnership, it is a C-Corp. and is taxed accordingly for federal income tax purposes. As a result, NEP issues a 1099 as opposed to a K-1 for tax purposes, with dividends taxed at the 15%-20% rate.

Last year, the partnership acquired approximately 400 megawatts of contracted wind assets from Brookfield Renewable for roughly $733.0 million, a step that was viewed as a positive transaction by the rating agencies.

NEP also acquired from NextEra Energy Resources, a corporate affiliate, a 590-megawatt net interest in an 830-megawatt portfolio of wind and solar projects. NEP’s business risk continues to improve, with acquisitions that have helped maintain its strong contractual profile and expanding geographic reach.

NEP reported Q1 2022 net income of $144.0 million or $1.72 per share, easily beating analysts’ $1.40 estimates. Operating revenue of $281.0 million was a slight miss versus expectations, but grew 14.2% from a year earlier due to contributions from new projects.

NEP’s acquisition strategy stands to improve sales and the bottom line in 2022. We continue to recommend this investment for medium-risk taxable portfolios. With this review, we are raising NEP’s fair value price to $80 from $57 for a 3.67% annualized yield.