If dividend income weren't taxed at all and sale of shares were taxed at 22.5%, would it make sense to invest for dividends then? That's the case in my country, Brazil. I cannot say that I am familiar with the ways taxation works in Brazil. But yes, if you are not being taxed on dividends, but you are being taxed on capital gains, you would prefer to receive your returns in the form of dividends. And so you would place a higher value on things that pay dividends. The prices of securities would adjust for this phenomenon,. like the prices of municipal bonds, adjust for their taxation characteristics in the United States.