In general, I agree, the tax on capital gains is significant. I've never asked myself this, but on reinvested dividends - also taxed? I suspect not, but I have doubt. If they are not taxed,, then there is significant benefit to reinvestment. The dividend stocks, for me, are held through retirement vehicles, so it doesn't matter. Given the tax situation, I agree with your strategy for the most part. There is no point in trading gains when you have to pay capital gains on it.