Stocks and Dividends

[adios]

I know Barrons sucks but I read it none the less because I get bored sometimes. There was an article this week about companies that don't pay dividends that should. Among the examples given were CSCO and MSFT as well as some companies that pay a miniscule dividend like HD and INTC. The article also pointed out that Warren Buffet's holding company Berkshire Hathaway hasn't ever paid a dividend in thirty years and the article implied that it never plans to. Interesting as I'm reminded of something that Michael Milken (I know but I think he had a lot of good ideas) stated back in the eighties. It was why he preferred high yielding bonds to stocks. It went something like this:

With the high yielding bonds I collect a return right away. With stocks the market more or less has to agree with me that the stock is undervalued for me to collect a return. With the high yielding bonds I never have to have the market agree with me. I can simply collect the coupon payment and cash in the bond when it's called.

Even though I've bought many stocks that didn't pay a dividend, I've always thought that at some point down the road when the company matured and growth slowed that dividends would eventually be paid. It's ok to reinvest the profits in future growth because it will lead to higher profits and thus higher dividends down the road at some point. I've always thought that this was an implicit agreement between stockholders and companies i.e. that at some point profits would be returned to the shareholders (I'm aware that there are different classes of stock for some companies which may effect payouts). Apparently this is not the case. I'm also aware of double taxation and many regard stock repurchases as a more tax efficient way of paying a dividend. Certainly that's the case if you want to reinvest the dividends. However, I don't always want to reinvest them and still the market must agree that the buybacks make a stock more attractive lets say. Anyway at some point, as a stockholder, I want my share of the free cash flow if you will. The alternative to never paying a dividend is to increase share holder value perpetually and having potential buyers be "convinced" that indeed share holder value has been increased and it's worth paying more money for the stock. Am I missing something?