Pros and Cons of Dividends — Röhl and Borgeat in Conversation
June 24, 2024
9 min read
Pros and Cons of Dividends — Röhl and Borgeat in Conversation
Growth or dividends? Christian W. Röhl, publisher of the annual dividend study, and Thierry Borgeat, Co-Founder of arvy, discuss with The Market by NZZ two valid investment perspectives with different accents. Here on arvy.ch you'll find the original interview plus the extended investor's view on the dividend-vs-reinvestment question — with respect for both positions.
In 30 seconds — the two perspectives
- Christian W. Röhl (pro-dividend accent): A rising dividend is an expression of resilience and adaptability. The «good feeling when money lands in the account independently of market sentiment» is more than just psychological — it creates behavioural stability for investors.
- Thierry Borgeat (pro-reinvestment accent): The compound interest effect is the «most powerful weapon we have as investors». Companies that reinvest their profit over decades into their own competitive advantage generate long-term value increases not achievable through dividend payouts.
- Both positions are valid — the choice depends on investor profile, time horizon, and psychological constitution. Critical only when investors «chase high dividend yields» (Röhl) or quality-reinvestors select without skin-in-the-game discipline (Borgeat).
The original interview — the core positions
Growth or dividends? In the opinion of Christian W. Röhl, author and asset manager in his own right, investors don't have to make this trade-off in stock selection. It only becomes critical «when investors chase high dividend yields». The publisher of the annual dividend study appreciates the good feeling «when money lands in the account independently of market sentiment».
Thierry Borgeat, founding partner of investment company arvy, emphasises in the conversation the long-term advantages of compound interest, which he describes as «the most powerful weapon we have as investors». Companies that reinvest their profit over decades could experience a value increase otherwise not possible.
Christian W. Röhl in the original interview
«A rising dividend is testament to resilience and adaptability.»
Röhl, longtime publisher of one of the most renowned dividend studies in the German-speaking region, emphasises the behaviour-stabilising function of regular cash inflows. A continuously rising dividend is, in his reading, also an operational quality signal — companies that achieve this over decades demonstrate structural strength. It only becomes critical when investors blindly «chase high dividend yields» and thereby neglect valuation discipline and business-model substance.
Thierry Borgeat in the original interview
«The compound effect is the most powerful weapon we have as investors.»
Borgeat accents the long-term lever effect of reinvestment. Quality businesses with high capital returns that reinvest their profit internally into the competitive advantage build over decades a compound effect not reproducible through dividend payout — the mathematics of compound interest is structurally dominant here. In the interview, Röhl and Borgeat also discuss their stock favourites for the respective strategy.
→ Read the full interview with concrete stock favourites of both experts on The Market by NZZ
01The uncomfortable question: why is dividend-vs-reinvestment so emotional?
Few topics reliably trigger emotions in retail investors like the dividend question. Mathematically that's surprising — from a pure value-creation perspective, a dividend is «only» a form of capital return, economically equivalent to a proportional stock sale. Yet many investors emotionally cling to their dividend strategy and make less emotional decisions on comparably important investment topics. The question doesn't fit into an NZZ interview format with the necessary depth — but it's the key: dividends address a psychological need that goes beyond pure mathematical return optimisation.
Three mechanisms explain the emotional charging of the dividend question:
- Cash-flow visualisation as success confirmation. A dividend that flows into the account is tangible feedback that the investment works. A value increase without cash flow remains more abstract — the psychological effect is different, even if economic substance is comparable. Röhl's point about the «good feeling» describes exactly this behavioural dimension.
- Compound-interest fascination as rational identification. Anyone who has once mathematically understood the compound-interest effect often strongly identifies with the reinvestment logic — reinvesting becomes an intellectual position. Borgeat's point about the «most powerful weapon» hits the core of this identification. Both identifications are valid — but they shift the discussion from «what is mathematically optimal» to «what fits my investor identity».
- Risk perception shifts by life phase. In the saving phase, reinvestment feels rational. In the withdrawal phase, dividend strategy feels safe. The emotional charging of the question is often also a life-phase discussion — which has different plausible answers in different life stages.
What unites both positions — and what separates them
Both Röhl and Borgeat are united by quality selection discipline: both would agree that stock selection should be concentrated on structurally strong businesses. They differ in the accent of payout policy: Röhl sees in a rising dividend an operational quality signal with positive behavioural effect for the investor. Borgeat sees in reinvestment the structural lever for maximum long-term compound effect. Both are right — the question is which aspect should be weighted more heavily for which investor.
02The two perspectives in structured comparison
The debate is not a «who's right?» question but a «what fits which profile?» question. A structured juxtaposition of both positions with their respective strengths:
Reinvestment accent
Borgeat position
Compound effect as «most powerful weapon»
- Maximum compound effect over decades
- Tax deferral on unrealised gains
- Capital works in the business with high RoIC
- Internally reinvested capital doesn't need re-allocation
- Optimal for saving phase with long horizon
Dividend accent
Röhl position
Resilience, adaptability, good feeling
- Rising dividend as operational quality signal
- Cash flow independent of market sentiment
- Behavioural stabiliser in bear phases
- Disciplines management against unproductive acquisitions
- Optimal for withdrawal phase or mixed investor profiles
What this juxtaposition shows: both positions have structural advantages in different investor contexts. The ideologically biased «reinvestment always better» or «dividends always better» investor ignores context dependency. Disciplined investors ask: what fits my life horizon, my psychological constitution, my tax situation, my cash-flow need?
Where both positions warn — the intersection of risks
Both Röhl and Borgeat explicitly warn against «chasing high dividend yields» (Röhl) and against structureless reinvestment belief without quality filter (implied in Borgeat's skin-in-the-game logic). A stock with 12% dividend yield is usually no bargain but a business in fundamental weakness. A business that «reinvests» without sensibly growing burns capital. Both strategies work only with strict business-model discipline as precondition. Without this discipline, both become traps.
03What this means for your quality portfolio
The dividend-vs-reinvestment question isn't binary, but a spectrum. Three strategic implications:
| Implication | What to do |
|---|---|
| 1. Quality filter first, payout policy second | Before deciding «dividend or reinvestment», ensure each position is a structurally strong business (moat, high capital returns, skin in the game). Both strategies work only with quality substrate. Dividends on weak businesses are capital destruction. Reinvestment in weak businesses is also capital destruction. |
| 2. Mix as default for most investors | Most investors benefit from a mix: 40-70% reinvestor businesses (long-term compound effect) plus 30-60% dividend payers (behavioural stability, cash flow). The exact ratio depends on profile — life phase, risk tolerance, psychological constitution. |
| 3. Strategy consistency more important than strategy choice | Anyone constantly switching between dividend and reinvestment strategy loses in both. Choose a strategy that fits your profile, and hold it consistently for 10+ years. Both strategies work — but only with consistency. |
| Investor profile | Recommended accent | Rationale |
|---|---|---|
| 20-40 years old, saving phase, long horizon | Reinvestment accent (60-80%) | Maximise compound effect, minimise dividend tax burden |
| 40-60 years old, mid life phase | Balanced mix (50/50) | Transition from saving to withdrawal phase, strategy stability important |
| 60+ years old, withdrawal phase | Dividend accent (50-70%) | Cash flow for living expenses, behavioural stability in bear phases |
| Investor with emotional bear susceptibility | Dividend accent regardless of age | Cash flow as behavioural stabiliser, prevents panic selling |
How quality selection works as precondition of both strategies is deepened in our pillar "The Tortoise Problem". The compound effect of reinvestment logic is described by our Unfair-Fights companion. Behavioural stability against emotional volatility reactions is treated by the Emotions pillar.
04Three scenarios — how dividend-vs-reinvestment strategies develop historically
Long-term returns of both strategies are statistically similar when both are disciplinely applied to quality businesses. Three plausible paths:
Bull Case
Disciplined reinvested quality delivers higher absolute returns
Over very long time spans (20-40 years) and with strict quality selection, reinvestment structurally delivers the highest absolute returns — that's the mathematical effect of compound interest. Investors with long investment discipline and psychological bear resilience benefit maximally. Example compounders like Berkshire Hathaway demonstrate this historically.
Base Case
Mixed strategies deliver more stable returns with better behavioural profile
A mix of reinvesting quality businesses and dividend quality delivers slightly lower theoretical returns, but higher realised returns — because behavioural stability reduces panic selling in bear phases. Across average investor reality, this mix is the pragmatically optimal result. Our base case.
Bear Case
Undisciplined strategies of both camps fail
«Dividend chasers» buying high dividend yields without quality filter experience structural underperformance and dividend cuts. «Reinvestors» investing in structurally weak businesses without skin-in-the-game discipline see capital destruction instead of compound effect. Both strategies fail without disciplined quality precondition.
05What you should review now
A strategy-clarity inventory takes 60-90 minutes. Four concrete checks:
1. Investor profile analysis. Life phase, cash-flow need, risk tolerance, psychological bear resilience — these four dimensions determine the optimal accent. Honest self-analysis instead of ideological pre-decision.
2. Check current portfolio structure. What share of your portfolio is in real reinvestor businesses (low to no dividend, high reinvestment ratio, high RoIC)? What share is in dividend quality (rising dividend over 10+ years, payout-disciplined businesses)? What share is in problematic «high-dividend-without-substance» businesses?
3. Include tax situation. Dividend taxation varies strongly by domicile (Switzerland, Germany, others). Reinvestor businesses defer taxes on unrealised gains. This tax optimisation can yield 0.3-1.0% additional net return per year — substantial over 30 years.
4. Define strategy consistency in writing. Define for the next 10 years a clear target allocation (e.g. «60% reinvestors, 30% dividend quality, 10% cash»). Written commitment prevents reactive strategy switches in market stress phases.
What disciplined investors do
They don't ideologise «dividends vs. reinvestment» — they choose pragmatically by profile. They hold in both strategy components exclusively quality businesses as precondition. They avoid the high-dividend reflex just as consistently as the blind reinvestor belief. They don't switch their strategy reactively, but hold it consistently for 10+ years. They adjust the accent gradually to life phases, not abruptly. This discipline respects both valid positions — Röhl's and Borgeat's — and translates them into pragmatic portfolio reality. That's ultimately the synthesis approach that both experts in different accents live in their own practice.
06Frequently asked questions
Which concrete stock favourites do Röhl and Borgeat name in the interview?
Both experts name their concrete stock favourites for the respective strategy in the full interview. We don't publish the specific names here because our focus is on the transferable strategy mechanics. The named businesses at that time are today possibly different — both experts' selection methodology remains valid.
Are buybacks (share repurchases) an alternative to dividends?
Buybacks are economically similar to dividends — capital return to shareholders, just in different form. Tax-wise often more favourable (in many jurisdictions). The behavioural «cash-on-account» element is omitted, however. Disciplined investors see buybacks as sensible element of the payout spectrum, especially when they occur at reasonable valuations. Buybacks at extremely high valuations are, however, capital destruction.
What about «dividend aristocrats» like Procter & Gamble or Coca-Cola?
Classic representatives of the Röhl position: businesses with decades of rising dividends that operationally-structurally demonstrate quality. Disciplined dividend investors concentrate on exactly such businesses. Important: not every «dividend aristocracy» is still quality today — periodic review of business-model substance is essential.
How does arvy handle the dividend question?
arvy follows a reinvestment-accented quality strategy but also holds dividend-quality positions. Concrete strategy mechanics and sector allocation you find transparently documented in the arvy Quarterly Report Q1 2026.
Further reading — the thematic anchors of this analysis
The Tortoise Problem
Quality as precondition of both strategies
Investing in Unfair Fights
Compound effect of reinvestment
Boring is Good — Quality Outperformance
Patience and reinvestor discipline
Master Your Emotions
Behavioural stability in bear phases
Six Quiet Compounders
Compounder examples
arvy Quarterly Report Q1 2026
Dividend-reinvestment mix in practice
Both positions are valid — the choice is personal
What makes the co-interview with Röhl and Borgeat particularly valuable is the clarity that both positions are valid and complement each other in their strengths, rather than excluding one another. Röhl's dividend accent addresses behavioural stability and the operational quality signal. Borgeat's reinvestment accent addresses the mathematical lever effect of compound interest. Both accents are right — the question is which fits which investor profile better.
What separates disciplined investors from average ones is not the ideological commitment to one of the two positions, but the honest profile analysis and the consistent implementation of the chosen accent. Both strategies work long-term — but only with quality business-model discipline as precondition and with strategy consistency over 10+ years. Investors who switch between strategies depending on which currently performs better lose in both. Investors who consistently live their chosen strategy — whether reinvestor-accented or dividend-accented — build over decades the long-term compound effect that both experts describe in different accents. Both are right. What matters is that you choose one and stick with it.
Original interview by NZZ editorial with Christian W. Röhl (author and asset manager, publisher of the annual dividend study) and Thierry Borgeat (Co-Founder arvy) as joint experts. The extended arvy companion piece written by Thierry Borgeat and reviewed by Patrick Rissi, CFA and Florian Jauch, CFA — with respect and recognition for Christian W. Röhl's pro-dividend position. Last updated: April 2026.
Disclaimer: This article is for general educational purposes and does not constitute personal investment advice. Past performance is no guarantee of future results. arvy is a FINMA-supervised asset manager with a CISA licence (Art. 24). Imprint & Legal Notice.
