When many investors think of energy dividend stocks, they tend to focus on integrated energy giants like Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM). But if we dig a bit deeper, we’ll find plenty of other stocks that either have higher yields or more stable business models.
Today, we’ll take a closer look at two of those oft-overlooked stocks: Kimbell Royalty Partners (NYSE: KRP) and The Williams Companies (NYSE: WMB). Kimbell represents a low-risk, high-yield play on rising oil and gas prices, while Williams offers investors a unique way to capitalize on the AI boom while generating steady income.
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Image source: Getty Images. Kimbell Royalty Partners
Kimbell Royalty Partners isn’t a traditional energy company. Instead of drilling for oil and gas, it owns the mineral rights to roughly 17 million gross acres across all major U.S. onshore basins.
Whenever an upstream company drills a well on its land, Kimbell receives a fixed percentage (usually between 12.5% to 25%) of the gross revenue generated from every barrel of oil or thousand cubic feet of natural gas produced. Therefore, Kimbell doesn’t need to spend a single dollar on capex for oil rig leases, drilling equipment, labor, and well maintenance — but it generates a steady stream of cash as long as upstream companies keep drilling on its land.
Kimbell is still exposed to fluctuating oil and gas prices, but it’s shielded against rising drilling costs, labor shortages, and supply chain inflation. It usually pays out 75% of its cash available for distribution (CAD) as dividends and uses the remaining 25% to service its debt.
In its latest quarter, its CAD rose 27% year over year to $60 million, and its cash distribution increased 15% sequentially to $0.47 per common unit. That equals an annualized yield of 13%, which could rise further over the next few quarters if oil prices remain elevated.
From 2025 to 2028, analysts expect Kimbell’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to grow at a 5% CAGR. With an enterprise value of $2 billion, it trades at less than six times next year’s adjusted EBITDA. Kimbell isn’t an exciting stock, but it’s a reliable dividend stock that can easily support its massive yield.
The Williams Companies
Williams owns more than 33,000 miles of pipeline across the United States. As a midstream company, Williams is well-insulated from fluctuating oil and gas prices because it only charges upstream and downstream companies “tolls” to pump resources through its pipes.