I don't necessarily disagree that MSFT stock is a better deal than these MSFT bonds, but the risk of "this cash-rich blue chip going out of business sometime in the next three years" is not the only one you have to take into account. For the stock to do worse than the bond over those 3 years, it wouldn't have to go out of business, only to go down a bit. For example, if MSFT stock ends up 3 years from now being down 20% from its current price, that wipes out all the dividends and eats away at some of the principal, and the 0.875% bond would win. And that doesn't seem particularly absurd as a possibility. Microsoft going bankrupt is quite unlikely, but MSFT declining from $25 to $20 is certainly in the realm of possibility.
