Mi amigo dice adiós.

Because mi is the possessive adjective used before a noun:

• mi amigo = my friend
• mi casa = my house

Mío is usually a possessive pronoun or a stronger possessive form, and it normally does not go directly before the noun in standard Spanish.

Compare:

• Mi amigo = my friend
• Un amigo mío = a friend of mine
• Ese amigo es mío = that friend is mine

So in this sentence, mi amigo is the normal choice.

Spanish usually does not use an article before a noun when a possessive like mi, tu, su, nuestro is already there.

So:

• mi amigo = my friend
• not el mi amigo

The possessive already tells you which friend you mean, so an article is unnecessary.

Because amigo is the masculine singular form.

• amigo = male friend / masculine form
• amiga = female friend / feminine form

So:

• Mi amigo dice adiós. = My male friend says goodbye.
• Mi amiga dice adiós. = My female friend says goodbye.

Notice that mi stays the same for both masculine and feminine singular nouns.

Because dice is the third-person singular present tense form of decir (to say, to tell).

The subject is mi amigo, which is he / my friend, so you use dice.

A few present-tense forms of decir are:

• yo digo = I say
• tú dices = you say
• él/ella dice = he/she says
• nosotros decimos = we say
• ellos dicen = they say

So:

• Mi amigo dice adiós. = My friend says goodbye.

Yes. Decir is irregular.

In the present tense, some forms change in different ways:

• yo digo
• tú dices
• él/ella dice
• nosotros decimos
• ellos dicen

So it does not follow a perfectly regular pattern like comer or vivir.

That makes dice something you should memorize as the he/she/it form of decir.

Because decir adiós is a very common Spanish expression meaning to say goodbye.

So adiós works like the thing being said:

• dice adiós = says goodbye
• literally: says goodbye

This is natural Spanish.

You may also hear similar expressions like:

• decir hola = to say hello
• decir que sí = to say yes
• decir que no = to say no

Here, adiós is an expression meaning goodbye.

In dice adiós, it functions as the word being said:

• Mi amigo dice adiós.
• My friend says goodbye.

It is not being used as a verb. The verb is dice.

The accent mark shows that the stress falls on the last syllable:

• a-DIÓS

Without the accent, Spanish stress rules would suggest a different pronunciation.

So the written accent helps show the correct stress.

A simple approximate pronunciation is:

• dice ≈ DEE-seh
• adiós ≈ ah-DYOS

So the full sentence sounds roughly like:

• mee ah-MEE-go DEE-seh ah-DYOS

A few notes:

• mi sounds like mee
• amigo has stress on -mi-: ah-MEE-go
• In Latin American Spanish, the c in dice sounds like s
• The d between vowels is usually softer than English d

Yes. Spanish often leaves out the subject when it is understood from the verb form or the context.

So instead of:

• Mi amigo dice adiós.

you might also hear just:

• Dice adiós.

That could mean He says goodbye, She says goodbye, or My friend says goodbye, depending on context.

In your sentence, mi amigo is included to make it clear who is doing the action.

Yes. Spanish word order is more flexible than English.

The most neutral order is:

• Mi amigo dice adiós.

But other orders are possible for style or emphasis, such as:

• Dice adiós mi amigo.

That is less neutral and may sound more literary or emphatic, but it is grammatically possible.

For learners, the standard pattern subject + verb + object/expression is the safest one to use.

Usually it means he says goodbye.

• Mi amigo dice adiós. = My friend says goodbye.

If you want to emphasize the exact spoken word, you could write something like:

• Mi amigo dice: adiós.
• Mi amigo dice “adiós”.

That makes it feel more like a direct quotation of the word itself.

Without quotation marks, the sentence is normally understood as the action saying goodbye.

Yes, but the meaning changes a little.

• mi amigo = my friend
• un amigo mío = a friend of mine

So:

• Mi amigo dice adiós. = a specific friend of mine says goodbye
• Un amigo mío dice adiós. = one friend of mine says goodbye

Mi amigo is more definite and direct.

No. Mi agrees with the noun that follows, not with the number of owners.

Here, amigo is singular, so you use mi:

• mi amigo = my friend
• mis amigos = my friends

Even if the speaker has many friends, one singular friend is still mi amigo.

No. Mi is the same for both masculine and feminine singular nouns:

• mi amigo = my male friend
• mi amiga = my female friend

It only changes for number:

• mi amigo
• mi amiga
• mis amigos
• mis amigas

So gender does not affect mi, but number does.

Yes. Dice is present tense, so the sentence means:

• My friend says goodbye
• or, depending on context, My friend is saying goodbye

Spanish present tense often covers both a simple present idea and something happening now, depending on context.