DJ FC.....thanks for clearing up where you're coming from on your dividend theory. I can see your point, and although it is very academic, it does makes sense from the stand point when looking at present value of dividends, etc. However, like you said, money is made on speculation.
Also, not all companies come to an end via liquidation. What about mergers/takeovers? That means regardless of dividends, a companies fiscal performance means a lot. low debt, high cash = great takeover target. Again, being a bride in a take over situation will mean a price increase typically. Also, like you said, speculation of financial performance.
Now, investors do care about dividends. It does help performance. Plain Vanilla funds are usually measured against a benchmark. Also, Fund of Funds measure their constituants by performance against a benchmark. so dividends can help, especially if the underlying stock price is appreciating. Also, hedge funds are measured by total performance. so, dividends can help because they get reinvested. Example (DJ FC I kow you understand this, but otehrs may not)...I owned 100 shares of a high dividend paying stock, 15% yield. After 6 months I now own 113 shares or something like that, because I re-invest the dividends into automatic stock purchases. Now, the price has increased about $3 a share since my purchace, so normally that would be a $300 return in 6 months or so. But, because of the dividends, I now have 113 shares, so my total $ return is $703 because of the dividends.
So, dividends do pay off.
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