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 or via the MCP
Install the Finance Toolkit with:
pip install financetoolkit -U
Then call get_reinvestment_rate as shown below.
from financetoolkit import Toolkit
toolkit = Toolkit(
["COST", "V", "NKE"],
api_key="FINANCIAL_MODELING_PREP_KEY",
start_date="2021-01-01",
end_date="2025-12-31",
)
toolkit.ratios.get_reinvestment_rate()
Or, after setting up the Finance Toolkit MCP, ask:
What share of their net income did Costco, Visa and Nike retain rather than pay out as dividends from 2021 to 2025?
Which returns:
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| COST | -0.148 | 0.7437 | 0.8012 | -0.2272 | 0.7305 |
| NKE | 0.6962 | 0.6032 | 0.6195 | 0.2855 | 0.2255 |
| V | 0.7727 | 0.7859 | 0.7828 | 0.7864 | 0.7666 |
Parameters
get_reinvestment_rate 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 (income and cash flow statement items) over, with balance sheet items averaged over the same number of period ends. 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 (per quarter and not annualized with quarterly data). | 4 |