Reddit wouldn't let me make a formatted comment in a comment thread on another post so I figured I'd just make a post and link to it in that other thread.

When a company pays a dividend, there is an extra, artificial price move in the dividend paying stock because of the payment of the dividend. If you assume two stocks that have the same market moves and you assume reinvestment for the div. paying stock, the two stocks turn out exactly the same, except the person who received and reinvested the dividend is worse off because they pay some taxes (either ST or LT gains) on the distribution.

Let's do some math. Option 1 will be the stock that pays a dividend, option two will be the stock that doesn't. The only difference is that the dividend paying stock has an extra price decline exactly equal to the price of the dividend. You can google it and it is well established that the effect of a, e.g., 1% share price dividend is equal to a 1% decrease in share price on or around the ex dividend date. Here's a Fidelity article explaining it in more detail. In the real world, it can be hard to see this clearly because stock prices move all day for various reasons. Perhaps the stock is down 2% on ex div. day because the company had bad news that contributed an additional 1% drop. Perhaps it's up 5% because the company had good news that contributed a 6% rise, but the dividend brings the closing price down to 5%. In the examples below, we'll assume prices only change once per day or w/e--that part's not important. The important part is that each stock experiences the same exact market forces, and at the end, except for the taxes paid by the dividend investor, the two situations are equal.

Dividend Paying - Person A

• 1 share of stock is worth $120, pays a dividend of $30, a 25% dividend (to make the math easier).
• Person has 1 share at $90 and $30 cash.
  • The price of the stock has gone down to $90/share, not because of market forces, but because that's how dividend distributions are priced in.
• Person reinvests and now has 1.33333 shares worth $120
  • (not really, but lets ignore the taxes for now).
• The stock goes down because of market forces. Perhaps the CEO of the company becomes a senior member of the government and people don't like what he's doing, so they tank his stock.
  • It goes down 33.3333% (1/3--assume repeating decimals are infinite) % to $60 per share, so the person has 1.33333 shares worth $80
• The stock doubles, going back up to $120/share. The person has 1.33333 shares worth $160.
  • But again, not really, because the person will pay taxes on the $30 dividend.

Non-Dividend Paying - Person B

• 1 share of stock is worth $120.
  • The price of the stock doesn't go down by 25% because there wasn't a 25% dividend paid.
• The CEO joins the government again, and the stock goes down by 1/3 and the person has 1 share worth $80.
• The stock doubles, and is now worth $160. The person has 1 share worth $160.
  • The person never paid taxes because there was no dividend.

Conclusion

• Person A ends up with 1.33 shares worth $160
  • Person A also has $20 of taxable gains (of some kind--unclear if short or long term).
• Person B ends up with 1 share worth $160.
• Both persons would be better off if they decided exactly when and exactly how much stock to sell instead of having the company doing it for them and calling the forced sale a dividend.

Edit: Got rid of link to other thread and an @ at a specific user, because it was a kind of shitty thing for me to have done.