In 2020, DTE Energy Co. (DTE) had an ROE of 10%, projected earnings per share of $4.05, and had a dividend level of $2.35.

In 2020, DTE Energy Co. (DTE) had an ROE of 10%, projected earnings per share of $4.05, and had a dividend level of $2.35. What was DTE’s:

  • Retention rate?
  • Sustainable growth rate?

Answer

  • Payout ratio = $2.35/ $4.05 = .5802 or about 58%
  • So, retention ratio = 1 – .58 = .42 or 42%
  • Therefore, DTE’s sustainable growth rate = .10 ´ .42 = .042, or 4.2%

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