Under the assumptions of Merton Miller and Franco Modigliani, for example, investors can always reinvest unwanted dividends, or sell shares to create homemade dividends, and thereby insulate their preferred consumption stream from corporate dividend policies.
Most obviously, the popular advice to "consume income, not principal" suggests a potentially widespread mental accounting practice in which investors do not view dividends and capital gains as fungible, as in the homemade dividends story and traditional theories of consumption, but rather place them into different mental accounts from which they have different propensities to consume.
Borrowing constraints are irrelevant in this setting, because the substitution of dividends for capital gains has no overall wealth effect, and homemade dividends can be created by selling shares.
The substitution of dividends for capital gains has no overall wealth effects, and homemade dividends can always be created by buying and selling shares.
The transaction costs of making homemade dividends are a more relevant factor a priori.
