I don't want it, it does not enhance value, and it misuses cash. Purchase shares while at a discount to BV. That gives investors the highest return. With a high return, I can take dividends at any time I want by selling shares.
While dividends, less than earnings, are not dilutive (the do not decrease book value) I do agree with the rest of your thesis. As long as the market is offering a discount to any reasonable estimate of tangible book, the only sensible use of free cash is buybacks. Let the institutions that want dividends wait until the market reflects the true value of this company.
Holders of significant positions in AIG want dividends. Nothing wrong with larger investors increasing their position 25%+. Earnings will outperform expectations with or without a dividend. A buyback would reduce shares and accelerate earnings. I own enough shares of AIG. I wouldn't mind some income and a higher share price.
I changed my view. I prefer management reduce share count via a buyback. Most shareholders own AIG because it is vastly undervalued. Management should take advantage of the below book price and buy back shares. There is a changing sentiment in the market today, rotating out of dividend stocks. I'm not saying management should act based on current market mood swings. It's just smarter to buy back at a steep discount. When the stock price appreciates to a proper level, management could then consider solidifying that price with a dividend.
Just because other investors want DILUTION via Dividends rather than enhanced value of shares owned via buybacks, does not mean I prefer dilution to make short-sighted investors happy at my expense. Buybacks enhance value. Dividends do not. All they do is cause me a tax liability for the dilution effect. What a monumental waste.