The market's been unkind to oil producers such as ConocoPhillips (NYSE:COP) thanks to the collapse in oil prices. In fact, Conoco's stock has fallen so far that dividend investors might be tempted by its current 4.4% yield.

Watch out, though. The last time oil prices were this low, Conoco slashed its dividend by two-thirds, and although the company's balance sheet is on firmer footing now, there's no guarantee that it won't happen again. Instead, investors should consider two other companies in the oil and gas industry. Both have seen their dividend yields soar in recent days but are better positioned than Conoco to weather an oil price downturn without sacrificing their dividends. 

Here's why you should look at ExxonMobil (NYSE:XOM) and Phillips 66 (NYSE:PSX) instead of ConocoPhillips.

A stack of pennies sits in a puddle of black liquid next to two miniature oil barrels and a stack of paper currency

Dividend investors should be wary of the oil industry right now as oil prices plummet. Image source: Getty Images.

An ace in the hole

2020 has been a rough year all around for oil investors, as global oil prices have steadily declined, and oil companies' stocks have fallen alongside them. But the Saudi Arabia-Russia oil price war, which has led to both countries vowing to flood the market with cheap oil despite all the money they'll lose, really sent oil stocks reeling. 

For dividend investors, though, this may be the perfect time to scoop up cheap shares of high-yielding oil major ExxonMobil. Yes, Exxon's share price has fallen by 45.5% already this year. But its dividend yield has soared in response and is now at 8.1%, an all-time high for the company.

Investors shouldn't be too concerned about a potential dividend cut. For one thing, ExxonMobil is a Dividend Aristocrat, having raised its dividend every year for the past 37 years. The company is unlikely to jeopardize that status by cutting its dividend now. It certainly kept upping its payout throughout the oil price downturn of 2014-2017, which saw crude prices crash below $30 per barrel, lower than they are today. 

ExxonMobil is conservatively managed and boasts a best-in-class balance sheet, meaning it can afford to take on some additional debt to keep its operations running smoothly while the oil markets sort themselves out. Certainly, as a global juggernaut, it will be able to afford to keep producing oil at low prices for much longer than many of its smaller, more indebted industry fellows. Not to mention, ExxonMobil can fall back on its refining and marketing operations to help offset losses from its production arm. Refining and marketing margins have been low recently, but a drop in oil prices may help them recover. 

Exxon's share price may take further hits in the coming months, and investors who buy in now should expect as much. For dividend investors, though, who plan to buy and hold for the long term, Exxon looks like a bargain right now.

You take the good, you take the bad

Oil producers aren't the only energy industry players hurting lately. Things have also been pretty bleak for U.S. refiners as prices for gasoline, petrochemicals, and other refined products have fallen. Most refiners' shares took a further hit when the Saudi-Russia price war began. Refiner/marketer Phillips 66, which doesn't produce oil, was no exception. Besides refining, Phillips 66 sells gasoline at its Phillips 66, Conoco, and 76-branded filling stations, and it even has some pipeline operations through its master limited partnership Phillips 66 Partners (NYSE:PSXP).

On one hand, low refined product and petrochemical prices are going to continue to hurt Phillips 66 in the short term. On the other hand, as the price of oil drops, the company may actually see an improvement in the "crack spread," the difference between the cost of crude oil and the selling price of refined products derived from it. Certainly, as gasoline prices drop, Phillips 66 is likely to see a bump in business at its filling stations. 

More importantly for dividend investors, Phillips 66 has increased its payout every year since it was spun off from ConocoPhillips in 2012. The shareholder-friendly company's yield is currently sitting at a mouth-watering 6.3%, and it's trading at less than 10 times earnings, which is near the low end of its historical range. Management will likely take this opportunity to buy back cheap shares through its existing share repurchase program, further benefiting shareholders.

There's a lot to like for dividend investors here, even if the company's share price is at the mercy of the oil and refined products markets. 

Look to the long term

One thing's for sure: In the short term, the oil industry is going to be a volatile place as the oil price war continues and companies and governments decide how best to react. Buying oil companies now isn't for the faint of heart. 

However, if you're a dividend investor focused on the long term, ExxonMobil and Phillips 66 are good bets in a troubled sector.