Actually its a terrible point for reasons I just finished explaining.
Say you hold $11 in stocks today.
Or you hold $10 in stocks + $1 in dividends.
The NPV of BOTH THESE ITEMS is the same, even though the $1 in stocks is in stocks not cash. Why? Because if the NPV of that $1 worth of stock wasn't $1, then it wouldn't trade for $1. Yes, the NpV of $1 today is worth more than $1 tomorrow, but the NPV of $1 today and $1 in stocks today IS the same (primarily because you could just liquidate the stock if you really wanted to.
Agree. A dividend is a way of 'forcing' a stockholder to convert a portion of his holding into cash. A buyback gives him the option of doing so, if he so desires.