When did the world go crazy? When did companies that pay dividends find themselves put on the defensive?

Back in the 1970s, when I was in school, I remember having done a paper exploring the relationship between dividend payout ratios and P/E multiples and while I canít recall what, exactly, I wrote, I canít forget the overwhelming bias in the literature of the day against companies that didnít pay dividends. Lately, though, an anti-dividend body of opinion seems to have emerged, at least on Seeking Alpha, such as was evident in a 1/10/12 article suggesting receipt or non-receipt of dividends is completely irrelevant to investors and another from 12/28/11 that tried to pass dividends off as being illusory. There have been many more; those are just the ones that are freshest in my mind.

I can understand investors finding reasons, lots of very good reasons, to want to own shares of non-dividend paying companies. There is no shortage of spectacular business and stock-market success stories involving companies that retained and reinvested every penny of profit they ever earned, ranging from the likes of Apple (AAPL) and the products it created to Berkshire Hathaway (BRK.A), which is known more for ordinary businesses selected through the superior capital-allocation skills of its legendary leaders. I get it. And in fact, given my affinity for small- and micro-cap stocks, especially at the smallest end of the spectrum, the ones I address in my low-priced stocks newsletter, I own lots of non-dividend payers.

But I also own many income stocks and find the disrespect being shown in some quarters for dividends and the companies that pay them to be just plain absurd.

Imagine a friend of yours is going into business, say a cafe, and needs a partner to contribute some capital. Would you be content to realize nothing Ė absolutely nothing, zero, zilch, nada Ė from your stake unless and until you sell out? Imagine the cafe does well. Your friend prospers. Heís the day-to-day manager and collects a salary from the closely-held corporation, and, perhaps monthly bonuses. The money going from the cafe to your friend appears on the corporate books as cost of goods sold, an ordinary expense. But you have a full-time job and donít work in the business. So you get no salary. If the corporation doesnít do the paperwork needed to declare a dividend, your friend will be making money hand over fist while you get nothing. You could sell. But that may destroy your friendship if he has trouble raising capital to buy you out and winds up having to close shop. Or perhaps you really want to hang on because you think the business has legs, perhaps even potential for a second or third cafe. All you want is to participate in the cafeís financial success. You recognize that your friend, the guy who is there working all the time, should pocket a lot more than you. But isnít it fair that you get something, at least as much and hopefully more than you could have received had you said no to your friend and kept your money in insured treasuries or CDs, if not on day one then at least starting at the point where the cafe is on solid ground. Is that too much to ask?

Dividends are meaningful; very, very meaningful.