I disagree with his point too, for a different reason (not that your reason isn't valid). Whether it's good to reinvest dividends should really depend on econo

I disagree with his point too, for a different reason (not that your reason isn't valid). Whether it's good to reinvest dividends should really depend on economies/diseconomies of scale. If a business is able to invest in something that really will save resources, or if they may leverage existing resources to open new markets in a more efficient way than a startup or competitor, then it's a good idea to reinvest the dividends. It was a good idea for Amazon to make use of their existing computing infrastructure to enter a new market (cloud computing) via reinvested earnings even though they didn't really save any resources by doing so. Likewise, if a business were able to reinvest their earnings to save resources, but only achieved a 1% ROI on that investment (e.g. every $100 we spend on making our factory energy-efficient cuts costs by $1/year for the foreseeable future), then investors should take the dividends instead as they could get a better yield just through treasuries. I guess this isn't technically an example of diseconomies of scale, but just think of any company with "too many cooks in the kitchen" syndrome and you'll know what I mean. To a rough approximation, any "reinvested" money by a business is simply a tax-protected reinvestment of the dividends that the stockholders would receive instead. That's why it's not enough to look at whether those capital investments save resources. That money needs to actually be better spent within the business than it could be individually by the business' investors elsewhere.