Dividend-Paying Stocks as an Alternative for Corporate Bonds?

Seminar paper from the year 2014 in the subject Business economics - Investment and Finance, grade: 2,0, , course: 6. Semester, language: English, abstract: Today's highly complex and fast changing capital markets offer a wide range of investment alternatives, which all hold different opportunities and risks for the investor. As a first basic differentiation, one can distinguish between direct investments as a form of equity capital, and providing debt capital. Based on the wide range of investments, it is not always that simple to make the right investment decision.

By taking a detailed look at the two investment alternatives, corporate bonds and dividend-paying stocks, prospective advantages and disadvantages of the two investment alternatives will be illustrated, as well as it will be carved out, if dividend-paying stocks, represent a preferred capital investment or if there are other mentionable alternatives.

Both investment alternatives will be illustrated regarding their different characteristics, their specific risks and the possible return yields for the investor. Afterwards, these relevant criteria and linked advantages and disadvantages will be compared by consulting recent and past developments. In the end an alternative investment type will be displayed roughly before the author brings it down to a round figure with a conclusion.