I think you're mis-applying the theory here and confusing Return on Risk? No matter what you say, if I buy a stock that expects to earn dividends, and I do earn those dividends, and I've realized a 5% dividend yield, I certainly have made a profit. Now, whether I'm getting return on risk is another thing and very well the answer may be no.
Don't think -so- that I've made a mistake. I can eliminate risk and make the same point:
Suppose you buy a perpetuity, granting $X every year. After 100 years, you'll have 100 times $X more dollars, but you will be worth exactly the same as you were worth before the perpetuity. (This assumes that the market correctly prices the perpetuity so that the expected value of purchasing it is $0).
EDIT:
I'm not talking about "profit" because it's not really a super useful concept here. Having a larger quantity of dollar bills after a period of time does not mean that I've got more value. Trivially, if I have $100 in 1950, and $101 in 2016, I have made a "profit" of $1 but lost a substantial amount in real terms.
I should cite sources and use correct terminology.
Wikipedia provides the following [0]
> The dividend discount model (DDM) is a method of valuing a company's stock price based on the theory that its stock is worth the sum of all of its future dividend payments, discounted back to their present value.[1] In other words, it is used to value stocks based on the net present value of the future dividends.
I still think you may be misapplying some theory. The points of discounted future cash flows, time value of money, and ev are not lost on me. But pointing out that an arbitrary profit figure irrespective of inflation is a "profit" is meaningless.
It's a nice Econ lecture but markets do not actually behave by a manner of collective estimate of dfcf. I would say it's more accurately described as a random walk with an upward inflationary bias.
