Paying dividends vs paying off debt vs using deposits
So, none of this is going to be rhetorical, just a few questions.
Is it responsible for a company to pay a dividend when they still have debt? If the interest rate is say 9%, why pay a dividend? Thats a higher rate than the average investor will be able to get if he reinvests the dividend somewhere else, so isn't it bad for stockholders to take a dividend when the company could be using that money to pay off the debt and increase earnings? If the interest rate is low, say 3%, I guess that is a different story but surely the company can earn a higher than 3% return themselves and should probably just reinvest in the company. But my question is mostly for debt above 4% or so.
On a semi-related topic, why do any banks sell corporate debt when they can't even lend all of their deposits? Banks are having a hard time lending the excess capital they have, so why would any bank ever need to sell corporate debt for 4-5% when they are already taking in deposits at 0.2% and can't put it to good use?