Are distributions really income to u?

Given how some of us would "calculate" our portfolio, dividend payouts, distribution and consider them as "passive"/monthly income whatever.

Regardless any dividend paying stock or etfs such as roundhill or yieldmax, the issue i hv with all these etfs are always on nav erosion even if u reinvested them on weekly basis.

For eg. If i allocate 100k start to a basket of these etfs and they pay 20% a yr. Every year it pays out 20k and even if i reinvest them, if and as long as nav does not catch up, my end of year cld still be 100k at end.

Which simple means i didnt gain 20k as income. Take if the end nav is 105k total income for entire year is 5k regardless how much yield was paid out, how cumulative or compound u want.

100k is hypothetical, i can go up to 1m and have 25% yield and end of yr my investment didnt grow. Any1 factor in this issue ?