"I," Sarah said, "believe Nancy is a good writer."
"I believe," Sarah said, "Nancy is a good writer."
"I believe Nancy," Sarah said, "is a good writer."
Each sentence now has a different subtext according to where the break is.
"I - and this is my personal belief even if it's not yours - believe Nancy is a good writer."
"I believe - but on the other hand I could be wrong about this - Nancy is a good writer."
"I believe Nancy - but not Jemima, Jim and John - is a good writer."
The belief is altered by the stress on the sentence, and the stress is indicated by the last word before the break.
That is a word that I use too much (That is a word I use too much is more succinct) but it does have its place from time to time...
"I believe that," Sarah said, "Nancy is a good writer."
In this case the 'that' is acting like a drum roll, making us wait to find out, gripping the table with the suspense of it all, who exactly does Sarah believe is a good writer. And the stress ends up with Nancy. Having said that, the original sentence - I believe Nancy is a good writer - doesn't need the addition of a that - I believe that Nancy is a good writer.
People tend not to speak in a monotone, so changing the stress is one way we can indicate the rhythm of their speech patterns. It's a good idea to say your characters' dialogue out loud so you can work out which words need to be stressed, and whether you need a break to indicate this. Mind you, anyone in earshot will think you're bonkers, but I reckon that's a small price to pay.