The paper is generally correct, but it is not a general statement, as in a general truth of options hedging in a theoretical context, rather a statement regarding how the structured derivs market is typically set up: retail and institutional investors buy a large number of products that at their core entail the dealer buying (from the investor) long-dated (3y+) otm put options, or perhaps even more often, down-and-in put options. The idea is that the value of this potential downside loss for the investor can be paid back by the dealer in the form of better returns (eg larger coupons) than what a simple principal-protected product would achieve. A typical popular product is a so-called Autocallable Note (see elsewhere).
Schematically, these products make dealers longer (implied future) dividends (ie. shorter delta to the forward) as the market goes down and one way to hedge that risk is to sell long-dated dividends via div swaps (or div futures).
The effect is sometimes quite violent as was seen on Eurostoxx div futures in 2008-9. The divs moves will then largely overshoot that of the index itself. In such instances it is fair to say that the forward div curve does not reflect “the expectations of market participants”, rather it reflects the large-scale forced selling by a number of them.
As a side note and this is the same effect at play, you also see that the typical term structure of div futures is downward sloping which opens up interesting opportunities if one can weather the swings in the meantime.