Dividend Stocks vs. Same Company Bonds: What's the Better Investment?

Stocks compete with the bond market for investor dollars. Equities are often compared to 10-Year Treasuries: when notes have low yields, stocks are considered attractive. However, little attention is paid to a comparison of a company's stock dividend and its 10-Year bond yield. A look at stock dividends and bond yields for the same company gives a treasure trove of information -- how well does the bond market think about a company's business and safety and whether the bond or stock has the more attractive pay out. Investors should therefore pay attention to the bond market. There are a number of companies in which bond holders are willing to lend money at low interest rates, literally allowing the businesses to turn themselves into free cash machines, churning out much higher dividend yields to shareholders. Five companies--Altria (MO), AT&T (T), Kinder Morgan Partners (KMP), Kimberly Clark (KMP), and Verizon (VZ)--have dividends... Read more