The interplay between stock price and dividend yield is pretty clear -- the lower the price goes, the higher the yield gets. So if you want to find enticing dividend yields, you will generally be looking at stocks that have fallen out of favor. There's clearly some risk when you buy unloved stocks, but that's not a bad thing if investors appear to be overreacting to short-term issues. And that's what seems to be the case today with integrated energy giant ExxonMobil Corporation (XOM -1.16%) and relatively tiny midstream partnership Buckeye Partners, L.P. (BPL). Here's a little background on these two cheap dividends stocks that you can buy right now.

1. Forgetting what makes it great

Exxon is among the largest oil and natural gas companies in the world, sporting a gigantic $310 billion market cap. That's an important number because it shows just how large and, consequently, hard to turn Exxon's "ship" really is. This is why the company focuses on running a conservative business with a long-term focus.   

A hand drawing an image of a scale weighing value and price

Image source: Getty Images.

To give you an idea of what this means, long-term debt makes up around 12% of this energy giant's capital structure today. That's among the lowest levels of its peer group. When oil prices tanked in mid-2014, Exxon used that financial strength to keep rewarding investors with annual dividend increases, something many of its peers couldn't do. Management did so because it believed oil prices would eventually recover from their lows, which they have since done. But let's put the debt issue in perspective: Despite adding around $20 billion dollars worth of debt during the oil downturn, long-term debt peaked at around 15% of the capital structure -- a modest level of debt for any company, let alone one operating in a commodity business.   

The strength of the company's slow-moving approach was a net benefit during the downturn, when its stock outperformed peers. But now that oil prices are heading higher again, investors have shunned Exxon in favor of competitors that have moved more quickly to take advantage of higher prices. That's left Exxon's shares trading at their lowest price to tangible book value ratio in more than 20 years. The yield, meanwhile, is above 4%, the highest Exxon's yield has been in roughly two decades.

There are issues, to be sure. For example, peers have caught up to Exxon's industry leading return on capital employed metric, and its production has fallen slightly in each of the last three years. But management recently laid out plans to fix both issues, including expanding in the onshore U.S. market and offshore in places like Guyana, Brazil, and Mozambique. The goal is to increase return on capital employed from the current 6% or so to a range in the low- to mid-teens. And while production growth is a goal, it's important to note that modest growth backed by highly profitable production is the real target.     

A bar chart showing Exxon's production goals and impact of new investments

Exxon's production goals are modest growth, but that's only one of the targets. Image source: ExxonMobil Corporation. 

If you're looking for a cheap dividend stock you can buy right now, out-of-favor Exxon is a great option. It may take a few years for management's current efforts to start showing results, but that's just par for the course -- a fact investors appear to have forgotten. In the end, the slow turn to the upside is part and parcel to the strength demonstrated during the worst of the oil downturn. Act now while investors are thinking short term.

2. Notable risk, but a double-digit yield

Buckeye Partners is another energy industry player with a long-term focus. The current yield is a massive 12%, thanks to a mixture of partnership-specific issues and the fact that midstream limited partnerships are out of favor today. The Alerian MLP ETF has fallen roughly 50% since peaking in 2014, with Buckeye's price off by around 55% over the same span. Buckeye's price, however, has fallen relatively hard over the last couple of quarters.

There are good reasons for Buckeye's weakness. For example, it recently made an over $1 billion investment that resulted in its distribution coverage falling below 1 in the third quarter of 2017. Information like that spooks investors. Although coverage picked up in the fourth quarter as that big investment started to generate cash, coverage was still a tight 1 times for the year. Management also decided to hold the distribution steady over the last few quarters after a long streak of quarterly increases -- another shift that rightly worries investors when added to this picture.   

BPL Chart

BPL data by YCharts.

However, Buckeye has been through this before. In 2013 and 2014, distribution coverage fell below 1 while the partnership was investing for the long term. When those investments began to pay off, coverage rose back to 1 or higher in each of the next three years. Management, meanwhile, has been very clear to address the distribution issue, stating that, "Buckeye has never cut its distribution and has no intention to do so now." In fact, it's got a 22-year streak of annual increases that will continue until 2019 even if the distribution remains the same this year and next (based on the mid-year timing of the last distribution increase). In addition, it doesn't expect to issue new units this year or in 2019 at this point in time, so capital access isn't a big issue.   

To be sure, there are good reasons to be concerned about Buckeye. That said, if history is any guide, the partnership will work through this spell of weak coverage and come out the other side a stronger and larger partnership. Right now, though, you can buy it with a double-digit yield and at an enterprise value to EBITDA level that's at the low end of its historical range. Buckeye isn't a great fit for conservative investors, but if you have a strong stomach, you should take a look.

Time-limited offers

Wall Street tends to move quickly, so you don't want to wait too long with Exxon or Buckeye. That's not to suggest investors are on the verge of realizing the value proposition each offers, only that waiting for concrete signs of a turnaround will probably lead to you missing the upside opportunities here...and the currently high yields. In other words, if you're looking for cheap dividend stocks you can buy right now, you should do a deep dive on this pair today.