http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks
Also, if you look at the dividend payout of VTI over the time period you will see the payout was down each quarter compared to the previous year. Since VTI owns all of the dividend paying US stocks, you an surmise that dividends on a whole were cut. Same goes for VT which covers all of the dividend paying stocks in the world.
1) If you go looking for confirmation bias from a website touting mutual funds, you will get it
2) He pointed out the NUMBER of dividend payers, but is there data on the AMOUNT of dividends cut? To my knowledge, the majority of dividend cuts happened to banks, whereas pretty much all of the other sectors were perfectly fine (for example, you can probably point out dividend cuts occuring now to the oil industry, but the companies cutting dividends are the ones who are smaller players or had terrible capital structure, tons of debt, etc., Exxon, Chevron, et al have not cut any dividends and they're paying out tens of billions of dollars)
3) I don't understand the logic in your payout statement. Any number of factors could contribute to the decrease in yield of VTI, including dividend cuts, an increase in the market cap of non dividend payers (weighing), exits of dividend payers, increase in small companies (who usually don't pay a dividend)
Look, a strict focus on yield is dangerous, but the academic evidence is pretty clear over a long period of time (and not the cherry picking 1991-2012 period your article states - the article was written in 2014, do you wonder why he didn't extend the period to 2014 and just decided to stop after 11 years?) that the 4th quintile of dividend payers outperform the rest of the quintiles handily on a total return basis (the top quintile of yield are normally due to companies' prices going down as the underlying business operations suffer, resulting in artificially high yields for a very short term period) -
http://www.suredividend.com/wp-content/uploads/2014/03/Dividends-A-Review-of-Historical-Returns.pdf - the study goes back to 1928 and uses the reliable and often cited French and CRSP data set
I assume you already know why indexing works (keeping costs low, diversifying holdings), so let me describe to you why the DGI philosophy works (although I don't personally practice it, I think it is pretty closely reflective of a value investing strategy). DGI actually has a lot in common with indexing, except instead of taking the market, a investor is taking a backdoor approach towards the valuation of a company.
1) You can't fake cash. A company that is able to consistently send out cash to its investors shows a great sign of health. What you need to watch out for is a rising payout ratio and financing of long term assets with short term, callable debt (this is what happened to banks in 2009). Even amongst banks, WFC and USB did not HAVE to cut their dividend, but was forced to by new capital regulation requirements. Index investors have a time advantage here because they don't need to bother with valuation of companies
2) DGI tells the investor to focus on the increasing stream of cash that's coming to them. Put another way, the strategy tells the investor to IGNORE STOCK PRICE. This is a huge advantage over most investing strategies because it helps prevent panicking. Just as an index investing strategy carried out the right way - writing an IPS, contributing each month, and forgetting about it (I mean, just look at all the posts popping up about switching allocations in this forum amongst indexers) will result in capturing actual market returns, a properly executed DGI strategy results in the same long term wealth building power, as long as you buy at a good price, and don't sell (I'm not a fan of DGI's mantra that dividend cuts and freezes must be sold immediately, this results in strong companies like Hersheys, Chevron, Wells, etc. being sold when there's no reason to)
3) Diversification is enjoyed by BOTH indexers and DGI - DGI spans the sectors including energy, financials, consumer staples, healthcare, etc. There are a lot of different diversification studies out there, showing that when you don't give any regard to quality, even 1000 different stocks is not enough, whereas if you focus only on blue chip (remember point #1, you can't fake cash), you only need 25-50 companies to be properly diversified. Brainlessly adding additional companies isn't diversification, it's copycatting an investing strategy without learning about it
EDIT: I forgot to talk about costs 4) A DGI portfolio carried out correctly will result in even less expenses than indexing. Provided there's no turnover, an investor only pays purchasing commissions, which is less than 5 basis points over long periods of time
Lastly, your suggestion to focus on total return during accumulation then switching to a preferred strategy at retirement would only work in a tax sheltered account (and the number one tax shelter, your 401K, is unlikely to allow individual stock investing anyways). When you are dealing with a taxable, the deferred taxes hurdle contributes quite a lot to capital allocation decisions and requires planning years in advance (think of it as an interest free loan from the government)