If you're an income investor, it's likely you're not happy right now. Interest rates were finally rising after a 30-year decline, but the pandemic forced the Federal Reserve to cut rates to zero. As a result, fixed-income investors are on an all-out scramble for yield. The Bank of America High Yield Index is currently at 4.1%, a figure near all-time lows for junk bonds.

Unsurprisingly, income investors are paying more attention to dividend-paying stocks, with many looking for underappreciated bargains. However, caveat emptor applies: Although many stocks have high yields, companies can cut payouts with no recourse for investors.

The key to finding great income investments is to find stocks on discount because Wall Street considers them too risky. Here are three such stocks I own in my portfolio.

Hand stacking coins with progressively higher stacks left to right to signify money growth.

Image source: Getty Images.

Altria has ESG and regulatory risks

Altria (MO -1.14%) is likely not going to end up on many environmental, societal, and governance (ESG) lists. After all, it's a cigarette maker. As ESG continues to rise in popularity among investors, Altria could see institutional ownership decline. For unbothered investors, shares yield 7%, and the company has the enviable designation of being a Dividend King -- a handful of companies that have paid and raised dividends for 50 or more consecutive years!  

The risk is that Altria is firmly within the crosshairs of the Biden Administration. Earlier this year, the Wall Street Journal reported the government was planning a host of actions that could impact Altria's top line, including banning menthol cigarettes and a proposed policy to lower cigarette nicotine levels to where it was no longer addictive. This is on top of a flurry of state lawsuits against vaping company Juul, in which Altria owns a minority stake.

For long-term investors, this is nothing new. The federal government declared war on smoking in the mid-1960s. Fifty years later, the smoking rate among adults dropped from more than 50% to less than 15%. Despite that, according to Wharton Professor Jeremy Siegel, the best-performing stock from 1968-2015 was Altria.

However, it's not all negative for Altria at the federal level, and the Biden Administration might provide the company with a growth driver. Democratic senators have introduced a bill to fully legalize marijuana at the federal level, which would boost the market for its 45% stake in cannabis company Cronos.

While it's likely Altria stock's growth days are behind it, income investors (like me) can sleep soundly at night owning shares.

Innovative Industrial Properties has legal risk

Innovative Industrial Properties (IIPR 0.11%) has a unique business model. The company is a real estate investment trust (REIT) that specializes in buying and leasing cannabis facilities like cultivation (growth) and processing properties. Riding the tailwinds of increased legalization at the state level, the company increased full-year revenue 161% last year and has grown the dividend 133% from 2019. IIPR's current yield of 2.5% might appear low, but this dividend growth stock will continue to hike payouts.

By specializing in the cannabis industry, IIPR has higher legal and regulatory risks than other REITs -- most notably at the federal level where cannabis remains illegal. To date, both Democrats and Republicans have allowed the company to operate with little interference.

Paradoxically, full legalization might not be in IIPR's favor either. Currently, the company operates in a sector many capital providers avoid for fear of running afoul of federal laws. In the event full-scale legalization occurs, it will broaden the capital base and make IIPR compete against companies that can source capital at cheaper rates.

I'm not concerned at this point. First, the Biden Administration appears to want to take the decriminalization route instead of full legalization. Second, IIPR is mostly inoculated against any federal action, as most of the facilities it finances are involved with medical use rather than the more controversial pure recreational type.

Finally, even if full legalization occurs, it's unlikely this will be a winner-take-all market. Many growers will continue to use IIPR for future financing due to existing relationships.

ExxonMobil has balance sheet and ESG risks

ExxonMobil (XOM -1.10%) faces a host of risks. As an oil and gas company, Exxon shares many of the same ESG risks as Altria.

Investors are increasingly expecting energy companies to lead the path forward on clean energy and are allocating capital accordingly. Exxon has been one of the slower to shift to cleaner sources, and it led to the ouster of three management-approved board members by small investment fund Engine No.1, despite the fact that it owned less than 0.5% of Exxon's shares.

Exxon's oil dependence was on full display during the pandemic. Full-year revenue fell 31%, and the company lost $22.4 billion, or $5.25 per share. Despite that, ExxonMobil maintained its long-standing dividend by adding a whopping $23 billion in long-term debt and in headcount reductions.

While the debt will take years to pay down, it's likely that the worst is over for ExxonMobil in the short run. The price of oil has nearly doubled since October, and the company's last two quarters have been profitable. Management is committed to not only paying the dividend, but also to continue increasing payouts to remain in the elusive Dividend Aristocrat club.

Unfortunately, the dividend isn't as appealing as it was last year because of the company's strong year-to-date performance. Shares of the company have advanced 38% in 2021, pushing the dividend yield from 8.5% to currently 6.1%. While ExxonMobil has long-term challenges, the dividend will remain safe for the foreseeable future.