Free Cash Flow Payout Ratio
Calculate the free cash flow payout ratio, the share of free cash flow paid out as dividends.
The dividend payout ratio (get_dividend_payout_ratio) compares the dividends with the net income, but dividends are paid from cash. A free cash flow payout ratio well below 1 leaves room for buybacks, debt repayment or a higher dividend; a ratio persistently above 1 means the dividend is funded with cash reserves or new debt and is at risk of a cut.
The formula is as follows:
\[\text{Free Cash Flow Payout Ratio} = | \text{Dividends Paid} | / \text{Free Cash Flow}\]Dividends are reported as a negative cash outflow, so their magnitude is used. A free cash flow of zero or less gives NaN.
Also known as: FCF payout ratio, dividends to free cash flow, cash dividend payout ratio, FCF dividend payout.
Free Cash Flow Payout Ratio in Python or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_free_cash_flow_payout_ratio as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["KO", "PFE", "VZ"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_free_cash_flow_payout_ratio()
Or, after setting up the Finance Toolkit MCP, ask:
How much of their free cash flow did Coca-Cola, Pfizer and Verizon pay out as dividends from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| KO | 0.6442 | 0.7988 | 0.8158 | 1.7631 | 1.6577 |
| PFE | 0.2922 | 0.3451 | 1.9293 | 0.9672 | 1.0766 |
| VZ | 0.5425 | 1.0388 | 0.5893 | 0.5945 | 0.5835 |
Parameters
get_free_cash_flow_payout_ratio accepts the following parameters.
| Parameter | Type | Description | Example |
|---|---|---|---|
rounding | int | None | The number of decimals to round the results to. Defaults to None, which uses the rounding of the Toolkit (4 unless set otherwise). | 2 |
growth | bool | Whether to calculate the growth of the ratios. Defaults to False. | True |
lag | int | list[int] | The lag to use for the growth calculation. Defaults to 1. | 4 |
compound | bool | Whether the growth is the compound annual growth rate over the lag (e.g. lag=5 for the five-year CAGR) instead of the total change. Defaults to False. | False |
standardize | bool | Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False. | True |
trailing | int | The number of periods to sum flows (cash flow statement items) over. E.g. 4 with quarterly data gives the trailing twelve months (TTM) and 3 with annual data a three-year cumulative figure. Defaults to None, which uses single-period flows. | 4 |