Now, here's the surprise in my hypothetical example: Suppose that my "corporation" is nothing more than a shell to invest in US Treasuries! The equity investor buys these "stocks", which pay a "dividend", and they get taxed much more favorably then if the investor bought the US Treasury themselves. The interest on US Treasuries are not tax-deductible at the federal level, and I believe that they get taxed as income.
If on the other hand, this were disguised as a stock dividend, then this would be more tax-efficient.
Another method to disguise an investment, and this maybe more lucrative and easier, is to disguise the corporate bond as a municipal bond, and the interest won't get taxed at all.