I mean, you know this, but this is only true for the most basic, dividend issuing non-growth company. Most of the genies don't give you anything per year. Their only value is the amount you can re-sell the genie for.
EDIT: I guess I don't understand the "gives you $1" part if we're not talking about dividends.
E is the company's earnings, not what it earns (or rather pays out to in that period) the shareholder. You (and maybe GP) seem to be confusing it with dividend yield?
As an owner of company, valuation includes both profit withheld and dividend. Think you have 100% of a company with $100 in bank, it makes a profit of $20 and gives $5 as dividend and keeps $15 so now has $115 in account. So, owner got $5 in cash and the book value of company is now 115, and future valuations will reflect on that.
Is it not clear from my parenthetical there that I understand that?
> it earns (or rather pays out to in that period) the shareholder
Comment I replied to was calling dividends, and only dividends, within a given year we're calculating P/E for no less, the company Earnings. That just isn't correct, whatever your views on valuation, shareholder ownership, and market efficiency.
Dividends don't matter. The companies just choose to buy stock from you with the profits instead of giving you cash. It's a smarter way because shareholders who want the cash can get it and those who don't can keep reinvesting profits while avoiding triggering tax events.
EDIT: I guess I don't understand the "gives you $1" part if we're not talking about dividends.