Strategy has secured board approval to transition its four preferred stock series, including STRC, to a daily dividend payment schedule. The proposal, filed with the US Securities and Exchange Commission on Friday following Thursday’s board decision, requires shareholder ratification at a virtual special meeting scheduled for Oct. 28. If approved, every calendar day will serve as a dividend record date, with payments distributed on the subsequent business day. STRC is slated to implement this change first, with an initial daily payment expected on Nov. 2. The remaining series—STRF, STRK, and STRD—will adopt the daily schedule in January, with their first payments anticipated on Jan. 4. These amendments will become effective after Strategy files updated certificates governing the preferred securities with the state of Delaware.
The move follows Strive’s earlier adoption of daily dividends for its SATA preferred stock, which began June 16 at a 13% annual rate. While Strive operates on a business-day schedule, Strategy’s proposal extends record dates to all calendar days. Strategy holds 846,000 Bitcoin compared to Strive’s 26,355 BTC. This initiative aligns with Strategy’s “digital credit” framework, designed to generate income from its Bitcoin treasury capital structure. STRC recently experienced volatility, dropping to an intraday low of $71.25 in June before recovering to approximately $98.41. CEO Phong Le attributed the decline to unexpected leverage entering the market, where investors borrowed against Bitcoin to capture yield spreads. To mitigate future risks, Strategy maintains a strong US dollar reserve and retains authority to repurchase STRC when it trades below its $100 stated amount.
Shifting to daily dividend accrual fundamentally alters the liquidity mechanics and investor behavior associated with Strategy’s preferred securities. By making every calendar day a record date, the company increases the frequency of cash flow events, potentially enhancing the appeal of these instruments to income-focused institutional investors who prioritize consistent yield distribution over lump-sum quarterly payouts. This structural change aims to stabilize demand for STRC and other series by reducing the incentive for short-term speculative trading driven by dividend capture strategies, thereby supporting the security’s price near its $100 stated value. The distinction between Strategy’s calendar-day model and Strive’s business-day approach highlights a competitive differentiation in how Bitcoin treasury companies are refining their capital structures to attract long-term holders.
The operational implication centers on managing the leverage risks identified by CEO Phong Le during the June downturn. The previous unwind was exacerbated by investors borrowing against Bitcoin holdings to purchase STRC, creating a feedback loop where falling Bitcoin prices forced collateral liquidations that depressed STRC’s value. By accelerating dividend payments, Strategy may reduce the spread arbitrage opportunities that attracted excessive leverage, while its policy of repurchasing shares below par provides a direct mechanism to support the asset’s valuation. Investors should monitor whether the increased administrative burden of daily processing affects the efficiency of the digital credit strategy and if the higher frequency of payments successfully dampens volatility in the secondary market for these preferred stocks.
