Just thinking out loud, but I wonder if Wall Street would be less awful about ruining companies if we were able to get a more meaningful dividend out of your average company? So perhaps the stock price itself stays relatively flat or boring, but the dividend paid out makes up for it. Or perhaps it would be the exact same issue and they’d be squeezing companies to maximize dividends.
I just know that I expect stock prices to go up because most “dividend stocks” give such a small amount of money per share.
This is the magic of the decentralized, invisible-handed, "free" market. Nobody (in particular) tells you what to do, and (ideally) you reach a canonical equilibrium which may (under some idealised circumstances) be optimal (in some sense).
If ifs and buts were candy and nuts this would be the cat's pyjamas. I shan't deny it's mathematically elegant, and also feels good in many ways, but the real trouble is it's exceptionally hard to form a watertight argument for an alternative.
Put another way, the appeal of the free market isn't so much in its correctness as it is in its simplicity. I can personally attest that it's sumple enough for any fool to understand, in an area of economics where it's devilishly difficult to establish anything solidly.
I say all this as someone who is a big fan of Valve and their work, deapite otherwise being a foss zealot, just because they throw a bone to our sort.
My impression of this is that it is partially a tax policy issue.
Dividends are taxed differently and higher than capital gains. So given a choice between a stock buyback and a dividend, often a buyback makes more sense.
I just know that I expect stock prices to go up because most “dividend stocks” give such a small amount of money per share.