Strategy Seeks Shareholder Consent for Daily Dividends on Preferred Shares Without Changing Rates

Proposal for Daily Dividend Payments and Implementation Plan

Strategy’s board approved a proposal to switch dividend payments on four preferred stocks, including STRC, to a daily schedule, without changing dividend rates or total payouts. Shareholders will vote on the amendment during a virtual special meeting scheduled for October 28.

If approved, every calendar day would be treated as a dividend record date, with the corresponding dividend paid on the next business day. STRC would be the first to adopt daily dividends with the initial payment expected on November 2.

The other preferred shares — STRF, STRK, and STRD — would move to daily payments in January, with first dividends under this schedule anticipated on January 4. The amendments will take effect after updated certificates for the preferred stocks are filed in Delaware.

Following Strive: the First Public Company with Daily Dividends

Strategy is following in the footsteps of Strive, a fellow Bitcoin treasury company that became the first public company to implement daily dividend payments for its SATA preferred stock.

Strive announced in May that SATA dividends would be paid every business day starting June 16 at a 13% annual rate and had eliminated its outstanding debt in Q1.

In contrast to Strive’s approach where dividends are paid only on business days, Strategy intends to make every calendar day a record date, with payments on the subsequent business day.

Strategy holds approximately 846,000 BTC compared to Strive’s 26,355 BTC as reported by BitcoinTreasuries.NET, making Strategy a significantly larger Bitcoin treasury company.

STRC Price Volatility and CEO's Explanation

STRC is a central element of Strategy’s digital credit approach, designed to generate income from a capital structure centered on its Bitcoin holdings.

In June 2023, STRC’s stock price fell sharply below its $100 stated value, reaching an intraday low of $71.25 on June 26, according to Yahoo Finance data.

CEO Phong Le, speaking on the Coin Stories podcast, attributed the decline to excessive leverage entering the STRC market, as investors borrowed against Bitcoin at low rates to buy STRC and gain from the spread between borrowing costs and dividend yields.

When Bitcoin’s price dropped, those who had borrowed against their holdings faced margin pressure, leading them to add collateral or sell STRC shares. Le acknowledged that the amount of leverage caught the company off guard and that this was an important lesson learned.

Company Measures and Current Status of STRC

To prevent a similar unwind, Strategy maintains a strong US dollar reserve and has a policy to repurchase STRC shares when trading below the $100 stated amount.

The company also aims to attract more long-term holders, especially institutional investors, to stabilize the investor base.

Since then, STRC’s price has recovered to about $98.41, near the company’s target trading range of $99 to $100. The preferred stock currently offers a variable annual dividend rate of 12%.