My friend Tim Beyers and I agree on a lot of things.

At least, so I thought until I read his article yesterday, suggesting that Google (NASDAQ:GOOG) shouldn't initiate a quarterly dividend policy.

"Google is a value creator," he writes. "Why take retained earnings away from a company that's proven it can produce returns for the sake of a short-term dividend? It doesn't make sense."

It's a fair point, though if we go by that logic we should ask every company that generates a positive return on invested capital or equity to kill their yields.

It doesn't work that way, so let me spell out the reasons for Google to warm up to payouts.

1. Google can no longer win backers on growth alone

I don't know if the world's leading search engine has seen itself in a mirror lately, but it's not the growth stock it used to be. Analysts see earnings climbing by just 9% this year and 15% come 2010.

In this environment, any growth is good growth, but it doesn't hurt to attract income investors as well.

2. Google is the new utility

Yield chasers have historically flocked to financial services, REITs, and utility companies for chunky distributions. How is that working out lately?

Banks are failing left and right, as shaky bailout recipients like Citigroup (NYSE:C) slash their quarterly disbursements to a token $0.01 a share.

slash their quarterly disbursements to a token $0.01 a share. Remember when investors found refuge in the $0.50-a-share quarterly dividend checks mailed out by mall rat General Growth Property (NYSE:GGP) ? That ended last summer, and the iffy REIT now trades for less than its former quarterly dividend rate.

? That ended last summer, and the iffy REIT now trades for less than its former quarterly dividend rate. Even the seemingly dependable utilities have imploded now and then. Great Plains Energy (NYSE:GXP) took a hit earlier this month when it cut its payout in half.

Income stocks are steady growers with predictable profit streams. Isn't that what Google has become? If Google paid a dividend, no one would doubt its ability to cover its dividend distribution. It would actually be one of the more dependable income stocks with its modest yet confident growth projections.

3. Google with cash is like a caveman with a modem

The search engine titan can have a healthy yield, simply by allocating a chunk of its free cash flow. It doesn't need to tap its nearly $16 billion in cash and short-term securities. We're talking about a sustainable dividend policy, not a slow leak.

Either way, what is Google hoarding for, anyway? It's not as if it's going to be able to go on a buying spree, now that regulators are eyeing its every move. It's operating under the same antitrust vigilance as Microsoft (NASDAQ:MSFT) , and perhaps being watched even more carefully since search dominance really is the Web's gateway.

Google can always aggressively repurchase its shares, and that is certainly an idea I can get behind. However, if it isn't backing up the truck here for money it is unlikely to squander elsewhere -- with its stock fetching just 16 times this year's projected profitability -- that's probably not in the works.

4. Google owes its investors

The "do no evil" company grew horns and brandished a pitchfork last month when it repriced employee stock options. The dilutive move for shareholders will find the company taking a charge as large as $460 million to rewrite its employee stock options at lower strike prices.

Google justified the move as a way to reward and retain its staff. Now it's time for Google to reward and retain its shareowners.

Do the right thing, Google

One can always argue that older tech behemoths like Apple (NASDAQ:AAPL) and Oracle (NASDAQ:ORCL) have done just fine without paying dividends. Don't get me started, because I think those companies should be cutting quarterly checks, too.

Maybe tech companies wouldn't have to issue so many stock options -- and deal with insiders exercising options to sell in the open market -- if their shareholders were on the receiving end of a steady trickle of investment income.

The time has come, Google. Yield to the right of way.

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