Most of us in the financial press treat the desirability of dividends as self-evident -- just like life, liberty, and the pursuit of higher returns.

Now, don't get me wrong -- I love dividends, and I've taken the time in the past to distinguish those that I consider safefrom those that I consider not so safe.

But, believe it or not, sometimes companies that pay dividends are doing you, the investor, a disservice.

No dividends, no problem
When a company pays a dividend, it's essentially saying, "Here's some of your money back. We have no better use for it."

You see, a company can do three things with its earnings (or cash flow, if you want to get technical):

The opportunity to reinvest is why growth companies rarely pay dividends. When a company is planning projects on which it expects high returns, it would be counterproductive to give back some of its capital.

This is why some very large, fairly established companies -- like new economy powerhouses Amazon.com (Nasdaq: AMZN), Google (Nasdaq: GOOG), and Apple (Nasdaq: AAPL) -- don't pay dividends. Meanwhile, when Microsoft (Nasdaq: MSFT) started paying a dividend earlier this decade, it signaled the end of its high-growth phase.

But even companies that are out of the high-growth phase can do a disservice to shareholders by paying a dividend.

When dividends are dumb
Look at Warren Buffett's Berkshire Hathaway (NYSE: BRK-A). Buffett famously refuses to pay a dividend because, as my colleagues Brian Richards and Tim Hanson have explained, he can invest the capital better than you can. In such a case, paying dividends to shareholders would actually destroy value.

More recently, we had big banks paying hefty dividends despite taking government bailout money. Before the TARP bailout last October, banks arguably had to maintain the tricky game of depleting their capital by paying dividends or, ironically, risk experiencing the next bank run due to lack of capital.

But with the post-TARP government "too big to fail" stamp, banks could slash their dividends and claim fiscal responsibility instead of impending death. Yet, instead of taking the opportunity to immediately slash dividends, big banks like JPMorgan (NYSE: JPM) and Wells Fargo (NYSE: WFC) continued their normal dividends into the next year. When they finally got smart and slashed dividends to a nominal level, their share prices actually rose.  

When companies that need capital (for growth or safety) pay out dividends, it's a dumb move. Raising capital through stock or bond offerings usually costs them much more than they would have paid by repurposing their dividend money -- which both JPMorgan and Wells Fargo learned the hard way over the last year.

When dividends are smart
So why do I love dividends? I've shown you some strong exceptions, but I love dividends because they're a great tool for reining in management.

If you've ever been part of a company's budgeting process (I have), you know that managers will generally use all the resources they're allocated. When there are real opportunities for the company, paying a dividend takes away management's ability to execute. Continued...