"The problem is that people think that dividends are some sort of "free money". You can't/don't/won't see that the stock drops in value by the amount of the dividend, therefor that drop doesn't exist."

You are right some people do think that way, but I'm not sure how many it actually is. I certainly don't.

I admit, it does baffle me just how a stock can drop say 2-3% to reflect the dividend payout that quarter/half year but I fully accept that - as the dividend payout is my bird in the hand/Jam today portion of my return and I know it comes at the cost of potentially lower amount of Jam tomorrow than may have otherwise been the case. Equally, I appreciate that money retained by companies can be misspent and not really add much benefit too.