Strategy Seeks Approval to Move Preferred Stocks to Daily Dividends

Strategy is asking shareholders to approve moving its four preferred stocks, including STRC, to daily dividend payments, without changing the dividend rates or total payout. The board approved the plan on Thursday, according to a Friday filing with the Securities and Exchange Commission. Shareholders will vote at a virtual special meeting on Oct. 28.

How the New Dividend Schedule Would Work

Under the plan, every calendar day would become a dividend record date, with payment made the next business day. STRC would switch first, with its initial daily payment expected Nov. 2. STRF, STRK and STRD would follow in January, with first payments expected Jan. 4. The changes take effect once Strategy files updated certificates for the preferred stocks in Delaware.

Strategy Follows Strive’s Lead on Daily Dividends

The move comes months after Bitcoin treasury firm Strive shifted its SATA preferred stock to daily dividends, becoming the first public company to do so. Strive’s SATA began paying every business day on June 16 at a 13% annual rate, and the company also cleared its outstanding debt in the first quarter. Strive’s schedule uses business days, while Strategy’s would use every calendar day as a record date. Strive holds 26,355 Bitcoin versus Strategy’s 846,000 BTC.

STRC’s Price Swings and Strategy’s Digital Credit Model

Strategy pioneered what it calls digital credit, preferred securities meant to generate income from a capital structure built on its Bitcoin treasury. STRC fell sharply below its $100 stated amount in June, hitting an intraday low of $71.25 on June 26. CEO Phong Le said on a podcast that more leverage entered the STRC market than expected, as some investors borrowed against Bitcoin at lower rates to buy STRC and capture the yield spread. When Bitcoin’s price dropped, those investors faced pressure to add collateral or sell.

Le said Strategy is working to prevent a repeat by holding a strong dollar reserve and keeping a policy to repurchase STRC when it trades below $100, while aiming to attract more long-term and institutional holders. STRC has since recovered to about $98.41, near Strategy’s target range of $99 to $100, and currently carries a 12% variable annual dividend rate.