[maxtower]

When you purchase an individual company's stock, you'll receive your dividends in cash deposited into your brokerage account.
A mutual fund will often allow you to reinvest the dividends in more shares or take a cash payment.
Changes in dividends will affect the stock price more than the actual dividend itself. If a company decides to increase its dividend payout, many will see this as a positive and the share price will rise accordingly. Likewise share prices usually fall when dividends are cut.

If a company reinvested its earnings wisely, then thats better than a dividend payout. Depending on the business though some companies have trouble reinvesting the profits and therefore choose to pay a dividend. In theory its better for the company to reinvest the earnings rather than pay a dividend because you lose money in taxes when a dividend is paid. This is why Berkshire Hathaway never pays a dividend. In practice its not quite that simple.