One aspect I like about the concept of dividend paying stocks is that the company in question would have a much harder time over-reporting their earnings/value or "cooking the books" (as in an enron situation) because they simply MUST get those quarterly checks out and no amount of fraudulent bookkeeping can satisfy that requirement. It would be extremely obvious if dividend checks bounced or didn't come, and so it is a built in system of checks and balances.
A dividend is never guaranteed, and can be cut at any time. Actually, an argument can be made that a stock which pays a large dividend, all else equal, is inherently more risky. Consider this, if a company which pays a large dividend, finds itself in a situation where it can't pay it, they can either:
1. Reduce/eliminate their dividend.
or
2. Borrow money to pay the dividend.
#1 will likely push their stock down even further, as many investors will have chosen their stock specifically for the dividend. This provides a strong incentive for #2. In fact, we see this all the time. Many dividend stocks don't cut or eliminate their dividend, until
after they've been in trouble for a while, and their price has dropped significantly. As a company, it's arguable they would have been better off
not paying out millions of dollars in dividends when they couldn't afford it. It's easy to see how adding additional liabilities to the companies book, can make their default inherently more risky.
The other aspect I like about investing for dividend income as opposed to capital gain income is that I think it makes the emotional ups and downs of the stock market easier to weather for the average non-professional investor. So basically what the OP eluded to. If you are investing for capital gains only, then you never have any "true" profit until you sell.
This is an illusion, and in actuality the investor holding these individual stocks is taking on much more risk vs simply buying the market index and being more diversified. As mentioned earlier, many dividend stocks have cut or eliminated their dividend,
after dropping 50-60% or more. This is not recommended for anyone seeking FIRE, or currently retired. Many investors lost their shirts after investing in high dividend stocks in the recent past, here are some notable examples:
General Motors
Kodak
J.C. Penny
Barnes & Noble
Washington Mutual
Citigroup
Bank of America
Also, the market index is not capital gain only, it has a dividend too. If you were so inclined, you could construct a 3 fund portfolio, holding 9,417 different stocks worldwide, and 710 different bonds, (60/40 allocation) yielding a bit over 3%. That's almost your whole 4% withdrawal rate right there, and your portfolio will be significantly less risky.
Long story short, if you choose to purchase individual stocks (for any reason), chances are you'll be OK...but why risk it?