When things looked depressingly bleak in early 2009, I started inching into corporate bonds and found that I could buy bonds of excellent companies for 25-39 cents on the dollar. The idea was: Why buy the stock when you can get all of this upside with the bonds and get paid 25% while you are waiting? The "bond fire sale" closed down pretty quickly and, as I redeployed into stocks, I constantly tried to compare the relative merits of individual stocks and the stock market in general to bonds. It is a complex, difficult and ultimately arbitrary exercise, but I think that every investor has to think it through - especially now.
In a world starved for yield, income delivered to shareholders as dividends should be treated differently from income retained by the corporation. I think investors are beginning to put a higher value on dividends, and, more importantly, dividends are more directly comparable to interest payments on bonds. An investor gets the dividend check in the mail and can invest it or spend it as he or she pleases.
Source: Seeking Alpha
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