Reinvestment Rate
Calculate the Reinvestment rate, a financial metric that measures the proportion of earnings retained by the company.
The reinvestment rate is a financial metric that helps investors assess the portion of a company’s earnings that is being retained by the company for future growth. It’s a valuable indicator for dividend investors as it indicates the sustainability of dividend payments and the company’s approach to distributing profits.
The formula is as follows:
\[\text{Reinvestment Rate} = 1 - \text{Dividend Payout Ratio}\]Also known as: plowback ratio, retention rate.
Reinvestment Rate in Python
get_reinvestment_rate is part of the Ratios module of the open-source Finance Toolkit. Install it with:
pip install financetoolkit -U
Then call get_reinvestment_rate as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(["AAPL", "TSLA"], api_key="FINANCIAL_MODELING_PREP_KEY")
toolkit.ratios.get_reinvestment_rate()
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| AAPL | 0.8472 | 0.8513 | 0.8451 | 0.8375 | 0.8623 |
| TSLA | 1 | 1 | 1 | 1 | 1 |
Parameters
get_reinvestment_rate accepts the following parameters:
- rounding (int, optional): The number of decimals to round the results to. Defaults to 4.
- growth (bool, optional): Whether to calculate the growth of the ratios. Defaults to False.
- lag (int | str, optional): The lag to use for the growth calculation. Defaults to 1.
- standardize (bool, optional): Whether to standardize (Z-Score) the result. When combined with growth=True, standardizes the growth values instead of the raw values. Defaults to False.
- trailing (int): Defines whether to select a trailing period. E.g. when selecting 4 with quarterly data, the TTM is calculated.