• a Canadian mutual fund company AIC (sorry- in French only)  (also in PDF doc.1462);
• Tweedy Browne (or as PDF -doc.1457; see also a related commentary by FinancialJungleGuy (or as PDF doc.1457C); 
• Jason Whitby Investopedia.com (also in PDF doc.1463); and 
• Lance Helfert SeekingAlpha (also in PDF doc.1464).

• some stress the need not only to receive but also to reinvest dividends to achieve superior overall returns (Dimson, Marsh Staunton);
• others say only that dividends are a major factor only in the long-term (Arnott) 
• others are based on equity investments in equal amounts, rather than according to their market value (market-cap), an approach that departs significantly from the market and can give a portfolio with higher risk (Keppler); 
• certain studies attribute the best returns to shares paying the highest dividends (i.e. first quartile), while others conclude that it is shares in the second quartile  that gave the best returns. 
• few of these studies seem to adjust their results to reflect the greater risk associated with investing in a sub-section of the overall market (for instance, only 72.6% of S&P 500 listed companies currently pay dividends, and that percentage decreases as an investor invests in the highest yielding shares; see Indicated Dividend Changes in S&P ).

Siegel

There's nothing wrong with investing with a value or a dividend focus. I would never claim that value never wins. The idea of the value index was to give a perfectly legitimate investment strategy to investors who were a little more conservative and wanted a little more income, and it's worked just fine.
One of the problems, in my judgment, with value weighting in general and dividend weighting in particular, is that it sometimes wins and sometimes it does not. I've been critical of this, what I call data mining in the period. You bring out a fund when it has proved itself and not when it has failed to prove itself. (emphasis added)

 
It is possible that many, many individual investors believe that stocks that don't pay dividends should not be held, or should be held at prices lower than the price of similar stocks that do pay dividends. This belief is not rational, so far as I can tell. But it may be there nevertheless.
Add these investors to the trustees who believe it is prudent not to hold stocks that pay no dividends and to the corporations that have tax reasons for preferring dividend-paying stocks and you may have a substantial share of the market. More important, you may also have a share of the market that strongly influences the pricing of corporate shares. Perhaps the best evidence of this is the dominance of this view in investment advisory publications.
On the other hand investors seem acutely aware of the tax consequences of dividends. Investors in high tax brackets seem to hold low-dividend stocks, and investors in low tax brackets seem to hold high-dividend stocks.
Furthermore the best empirical tests that I can think of are unable to show investors who prefer whether investors or investors who avoid dividends have a stronger effect on the pricing of securities.
If investors do demand dividends, then corporations should not eliminate all dividends. But it is difficult if not impossible to tell whether investors demand dividends or not. So it is hard for a corporation to decide whether to eliminate its dividends or not.
Corporations can not tell what dividend policy to choose, because they do not know how many irrational investors there are. Source: The Dividend Puzzle, p. 12 in the book Streetwise: The Best of The Journal of Portfolio Management compiled by Bernstein and Fabozzi, 1998, Princeton University Press. 

There are few aspects of corporate financial policy where the gap between the academics and the practitioners is larger than that of dividend policy. The academic consensus is that dividends really do not matter very much. The market does not, and should not be expected to, pay premium prices for adopter firms what are sometimes called "generous" dividend policies. If anything, generous dividends may actually cause the shares to
sell at a discount because of the tax penalties on dividends as opposed to capital gains. Most practitioners on the other hand, both among officials and corporate investment bankers, still continues to insist that a firm's dividend policy matters a great deal.
p. 3 of 15 (emphasis added)

I'1l argue that the seeming evidence that dividends do matter-evidence I hope at least some of you believe, so that I'm not just preaching to the choir, is not to be trusted. It's an optical illusion. (emphasis added)

In sum, unexpected dividend actions in a world of rational expectations provide the market with clues about unexpected changes in earnings. These in turn trigger the price
movements that look like -but only look like- responses to the dividends themselves. p. 14 of 15

Myth No. 1: dividend-yielders outperform
Back in the 1980s and 1990s, many academic studies found that dividend-paying stocks provided historically the best of all worlds-above-average total returns with below-average risk. The result: a flood of ETF’s designed to capture the potential performance advantages of higher-yielding stocks. But in reality, Schwab research has found that dividend-paying stocks have generally underperformed non-dividend-payers over the past 18 years (see "Dividend-paying stocks have underperformed"). Among dividend-paying stocks, we found no material return or risk differences between stocks with high, medium or low dividend yields. (or as PDF doc.1470 PDF)

The best prediction of asset-class returns probably comes from simply adding the coupon rate or dividend to the earnings-or dividend-growth rate. (This is referred to, somewhat grandiosely, as the "Gordon equation" and falls out of the discounted dividend model.) John Bogle calls this simple sum the fundamental return. Unfortunately, in the short term this estimate often gets thrown for a loop by changes in multiple asset class (or in Bogle's lexicon, by the speculative return). For example, if an asset valuation doubles in the space of a year, then that asset's return will be about 100%, since this will dwarf the contribution of the dividend and growth sum. But over long periods of time, the speculative return washes out, leaving only the fundamental return.
 
This article, then, is a tour d'horizon of our best estimates of the fundamental returns for the asset class universe. Please, please, do not take these estimates as short-term predictions (and by "short term" we mean anything less than 20 years). As Newton famously said, "I can predict the motion of heavenly planets, but not the madness of human beings." Translated into Bogelese, all we can do is discuss expected fundamental returns. We'll leave speculative returns to Wall Street Week, CNBC, and the rest of the investment pornography industry. Source: EfficientFrontier (or as PDF doc.1471)  ; see also a discussion by the site Zimbio.com (or as PDF doc.1472)

USA

Common Approaches for Increasing income portfolio, and why they may be inadvisable
For those investors who are not comfortable spending from their portfolio's balance and / or whose portfolio cash flow is insufficient for their needs, there are three primary ways to increase income: increase their overall allocation to bonds; keep their existing bond allocation but tilt it toward high-yield bonds, or tilt their existing equity allocation toward higher-dividend paying stocks. None of these strategies are preferred strategies for maintaining inflation-adjusted spending over long periods. p. 5 Vanguard (or as PDF doc.1473)

I think there is a lot of psychology involved here. Many retirees are (naturally) fearful of running out of money, and so they attempt to preserve their capital by not selling shares. Once they have constrained themselves in this manner, they try to "cheat" by increasing their cash flow for spending. They do this by purchasing high-yield investments, whether they be high-dividend stocks or mutual funds or high yield bonds or mutual funds. This is the allure of high dividend stocks. The retiree can lull himself into thinking he is preserving principal, while spending more. Comment from a user (Andy) on the Bogleheads forum on investing (or as PDF doc.1474

As share price falls, the cash dividend divided by the share price, known as "dividend yield", gets higher. Imagine if a $ 20 stock paid a $ 1 annual cash dividend. That's a 5% return, which you would compare to all kinds of other available options such as money market accounts, bonds, etc.. If the stock fell to $ 10 per share, the yield would suddenly be 10%. The stock would become more attractive and people or companies that did have excess funds, such as insurance groups or international corporations not damaged by domestic problems, are lured in by the relatively higher returns they can earn. If a company is healthy, in a world of 5% interest rates, it's highly unlikely that it's going to have a dividend yield of 15% or 20% because someone, somewhere, with a whole lot of cash is going to step into the situation. Source: Joshua Kennon (or as PDF doc.1475) 

There are many reasons why dividend stocks are superior to non-dividend stocks.
One reason is that most stocks rise and fall on average at the same pace as the market. Stocks that pay dividends however, offer an extra incentive to hold on to them during tough times.
Another reason to hold on is that most dividend stocks represent mature companies with stable business models that generate much more in earnings than what could be re-invested back into in the business. Slower growth companies will generally experience much lower drops in share prices in comparison to hot growth sectors. Source: DividendGrowthInvestor (or as PDF doc.1478)

Dividends provide very little - if any - downside protection during market corrections. The S & P 500 was down 41.82% during the September 2008 to March 2009 crash. During the same time, the SPDR S & P 500 Dividend ETF was down 35.87 per cent, which does not seem like much downside protection. Additionally, some well-known, dividend-focused funds provided no downside protection and performed worse than the S & P 500 over this period. For example, the Fidelity Dividend Growth Fund was down 46.94 per cent and the iShares Dow Jones Select Dividend Index was down 43.07 per cent. Source: Jason Whitby Investopedia (or as PDF doc.1479)

• in the case of interest on government bonds, we are talking about investments that are far less risky than those of shares issued by companies.
• it would be fairer to compare the taxation of interest on government bonds to the taxation of  the fixed rate dividends on preferred shares, while most dividend-investing investors compare the tax treatment of interest to dividends on common shares. If preferred shares are already riskier than government bonds (see Risk and preferred shares on our site), common shares which rank after preferred shares in bankruptcy are even riskier.

The idea of tilting a portfolio toward higher-dividend paying stocks became more popular after the Jobs and Growth Tax Relief Reconciliation Act (JGTRRA) of 2003 reduced the tax rate on qualified dividends from as high as 35% to 15%. The tax rate on qualified dividends is now equal to the tax rate on net long term capital gains. This reduction led many investors to believe that there was no difference between the taxation of cash flows on qualified dividends and the taxation of capital gains. Not so: While it is true that the 15% tax rates are identical, the amounts that the tax is applied to are not. That is because a qualified dividend is taxed at 15% in its entirety, whereas if the equivalent sum is realized from a stock sale, the 15% capital gains tax will only apply to whatever portion of the sum represents a gain. As a result, both pre-and post-JGTRRA, dividends should be avoided from a tax perspective. Source: Vanguard p.7 (or as PDF doc.1480)

 
Long-term investors also like dividends Because they make it easier to fund and automate "dollar cost averaging." In simplest terms, dollar cost averaging is the process of investing a specific amount of money on a regular basis, usually per month or quarter. When the stock price is high, the amount buys fewer shares, but when the price drops, it buys more shares. Over time, one accumulates stock at an average price well below its periodic highs. Direct reinvestment plans, or DRIPS, automatically reinvest dividends, which may improve compound returns. Source: SeekingAlpha

Most corporations that pay a portion of their profits to investors prove that earnings are real, and not a result of the manipulation of GAAP rules. DividendGrowthInvestor

The Quality of Earnings is Higher
It's hard to fake cash. When shareholders get checks in the mail, there is at least some proof that the earnings are not just accounting magic. This makes people more comfortable holding the stock during uncertain times because they know there is some value there. Source Joshua Kennon (or as PDF doc.1475)

 
Another argument one commonly hears is that the requirement to pay dividends tempers management's spending elsewhere, "saving corporations from themselves," as one columnist put it "Wasteful, egomaniacal corporate spending is rampant. It's not that executives are not trying. But lacking a strong incentive to return the cash to shareholders, optimistic CEOs waste your money chasing projects that do not work out. "Often, executives are compensated based on pre-tax earnings goals instead of per-share goals, and this situation can misalign executive and shareholder interests. Not all executives make bad capital allocations, but this illustrates the importance of studying management's historical capital allocation. Source: Lance Helfer  SeekingAlpha  (or as PDF doc.1464 ).