One of the biggest drawbacks of income / dividend oriented investing is that during the accumulation phase, the concentration on growth usually tends to result in better investment ROI CAGR, especially taking into account the lack of taxation drag. Over the long-term, the differences can definitely be substantial.
However, one of the possibly underappreciated and under-discussed aspects is the psychological effect that more "tangible" results of investing have on behaviour and motivation.
Oftentimes when you look at the numbers shown by the broker, emotionally and psychologically it doesn't "feel" that you are getting richer because the numbers there can both, increase or decrease, and are generally unstable.
However, when you are actually receiving dividends from your investments and are able to say "if I invest 1,000 USD, I will get 80 USD in dividends per year", this can be a very motivating and encouraging to keep doing. In addition, having this figure could be useful in trying to convince your spouse or your friends to invest, too, as investing is very often viewed as gambling by the general population.
Aversion loss is a known psychological phenomenon where the losses (or perceived losses) are more psychologically painful than gains. This is what it leads to selling at the worst possible time. Investors often like to say that they don't care about the swings as long as in the long-term, the CAGR remains healthy, but reality often shows otherwise. A large % (maybe even most?) of investors can't avoid being psychologically affected and selling off when they should hold.
In income and dividend oriented investing, knowledge that you will receive dividends regardless\* of stock market movement can help mitigate the psychological pain of seeing the downswing and avoid selling at the worst possible time.
So, what are your thoughts on this? Am I overestimating this psychological phenomenon?
\*I know that a lot of dividend payers can reduce their dividends during the economic shocks, and I know that a lot of stocks or funds that focus on high 12%+ yields result in NAV erosion over time (see QYLD or GOF), but there ARE some covered call ETFs or income funds that have a significantly lower chance of long-term NAV erosion that still give decent yields, such as JEPI or ARCC, having read the strategies of SPYI and QQQI, I could see them having stable long-term NAV as well.