If the dividend tax rate is higher than the tax on sold shares, then it is beneficial for the investor to sell the shares themself if he wants a "dividend", and conversely. Now, the question is, if a dividend is paid in shares, doesn't the investor pay tax on that? That would make a dividend paid in shares optimal for the investor. It makes no difference to the company.

I seem to recall that un Spain there would be no tax on stock sales if the shares had been held for a period of several years. That gave the long-term investor an advantage consistent with their greater social utility. I don't know what the situation is currently.

Those whom the Gods wish to destroy They first make mad. -- Euripides