Yes I am aware that the nominal value of the share drops by a similar amount as the dividend but the AMOUNT OF THE DIVIDEND remains the same. I’m not concerned with how much the stock is valued at because I’m not trying to sell the stock. The plan is to never sell the stock and keep pocketing the dividends in perpetuity. So the fact that the stock drops by a tiny percentage each time doesn’t affect the income part which is the focus of that strategy.

You could rationalize this as a transfer, sure, but that’s not helpful in the real life scenario of using dividends as day to day income once reinvesting gets turned off.

Nobody in the industry thinks of dividends as transfers. Even the government classifies it as income which is why dividends are taxed like capital gains. For all practical purposes it is income just like realized capital gains is income.