Which race is better for Paladin: Dwarf or Half Elf?

[Snaggles]

The most regrettable racial picks are due to not being able to access certain items, even if more mid-range. It’s still of no material difference being able to do the same job as another.

Natures defender (Tunare pallies)
Shield of stalwart seas (eru)
Imbued granite Spaulders (no shorties)
Frostreaver (human and dwarf)

These are mid-range items at best. I’d play what you like the look of. If you take joy out of min-maxing maybe pick on that basis however your napkin math shows to be the “best”.