The recent bond offerings of Microsoft (NASDAQ: MSFT) and Apple (NASDAQ: APPL) evince the superiority of buying the shares of a company rather than the debt for those looking for income from their securities.

The bonds of Microsoft and Apple both yield less than the dividend payment. Immediately, just on the income, you are better off buying the stock.  In
addition, the dividend of Microsoft and Apple will most likely increase.  The dividend in the bond is set.

Not only is the dividend yield for Apple and Microsoft higher than the bond yields, each’s is higher than the average of around 2% for a member of the Standard & Poor’s 500 Index.  The dividend yield for Apple is now around 2.4%.  For Microsoft, it is almost 2.80%.  As each has loads of cash, it is likely thatit will be increased.

Both companies also have a very low dividend payout ratio.  That means there is plenty of money to fund a dividend increase or a stock buyback.  As a very timely example, Apple just committed $100 billion to a stock buyback and dividend program.

What also makes Apple and Microsoft appealing is the change in the culture of each company.  Each is now committed to paying a healthy dividend.  It was certainly not that way forever.   As the chart below shows, you can buy Apple on weakness or Microsoft on strength.  Either way, a steady stream of income that will most likely rise is assured.