beaker7,

Are you an "investor" (buy and hold, ideally for several years, until the things that attracted you to the company are no longer true or you find a better investment) or a "trader" (buy/sell according to fixed rules that could end a trade at any time)?

The answer to that will tell you which of your two strategies (HG and REITs) is likely to generate more unqualified gains (REIT dividends are unqualified and so are short-term capital gains).

If you estimate it as very likely that your gains in the smallcaps will be long-term (e.g. your plan is buy-and-hold), I don't see a problem with keeping them in a taxable account. Obviously REITS are best in a tax-advantaged account.

I agree that you shouldn't automatically reinvest dividends. The exceptions are if your position is tiny or if you have no trading costs. Most of the time you should let your dividends credit to your account and then periodically decide what to do with that (and any additional) cash.