Strategy seeks shareholder vote on daily dividends for four preferred stocks
Strategy wants preferred stock dividends paid every day
Strategy is asking shareholders to approve a change that would move its four preferred stocks, including STRC, to daily dividend payments. The company says the dividend rates and the total amounts paid would not change.
The board approved the proposal on Thursday, according to a Friday filing with the US Securities and Exchange Commission. Shareholders will vote on the amendments at a virtual special meeting on Oct. 28.
Preferred stocks are a type of share that usually pays a set dividend. A dividend is a cash payment a company makes to holders of certain shares.
Key details of the proposal
- Four preferred stocks are covered: STRC, STRF, STRK and STRD.
- If approved, every calendar day would become a dividend record date, with the matching payment made on the next business day.
- STRC would switch first, with its first daily dividend payment expected on Nov. 2.
- STRF, STRK and STRD would follow in January, with first payments under the new schedule expected on Jan. 4.
- The amendments would take effect after Strategy files updated certificates for the preferred stocks with the state of Delaware.
What the SEC filing shows
The proposal was approved by Strategy's board on Thursday and disclosed in a Friday filing with the SEC, the regulator that oversees US public companies. The filing sets out the plan to change the dividend payment schedule and the vote date for shareholders.
How this compares with Strive
Strategy's proposal comes several months after another Bitcoin treasury company, Strive, moved its SATA preferred stock to daily dividend payments. According to the source material, Strive became the first public company to adopt that model. A Bitcoin treasury company is a business that holds Bitcoin on its balance sheet.
Strive announced in May that SATA would begin paying dividends every business day starting June 16 at a 13% annual rate. It also reported that it cleared its outstanding debt in the first quarter.
The schedules differ. Strive's plan uses business days. Strategy's proposal would make every calendar day a record date, with the dividend payable on the following business day.
Strive holds 26,355 Bitcoin, compared with Strategy's 846,000 BTC, according to BitcoinTreasuries.NET.
STRC's price drop and the CEO's explanation
STRC, a key part of what Strategy calls its digital credit strategy, has seen large price swings this year. In June, the stock fell sharply below its $100 stated amount and hit an intraday low of $71.25 on June 26, according to Yahoo Finance data.
Speaking on Natalie Brunell's Coin Stories podcast earlier in the week, Strategy CEO Phong Le attributed the decline to more leverage entering the market for STRC than the company had expected. Leverage means borrowed money used to make a larger investment. He said some investors borrowed against Bitcoin at lower rates to buy STRC and capture the difference between their borrowing costs and STRC's dividend yield.
When Bitcoin's price fell, investors who had borrowed against their holdings faced pressure to either add more collateral or sell STRC, according to Le.
"We did not expect the amount of leverage that came into the system," Le said. "And so that's a lesson learned, next time around."
Le said Strategy is trying to prevent another such unwind by keeping a strong US dollar reserve and by having a policy that allows the company to buy back STRC when it trades below its $100 stated amount. He also said the company wants to attract more long-term holders, especially institutional investors.
STRC has since recovered to about $98.41, close to Strategy's stated goal of keeping the security between $99 and $100. It currently carries a 12% variable annual dividend rate.
What is confirmed
- Strategy's board approved the daily dividend proposal, and the company filed it with the SEC on Friday.
- Shareholders are scheduled to vote at a virtual special meeting on Oct. 28.
- The plan would not change dividend rates or total amounts paid.
- Expected first payment dates are Nov. 2 for STRC and Jan. 4 for STRF, STRK and STRD, if the amendments are approved and filed in Delaware.
- Strive moved SATA to daily dividends on June 16 at a 13% annual rate, using business days.
What is still unclear
The shareholder vote has not happened yet, so approval is not confirmed. The expected payment dates depend on that approval and on Strategy filing updated certificates with Delaware. The source material does not say how the four preferred stocks would trade under the new schedule, or when the changes would take full effect beyond the stated dates.
Why this matters for Strategy's Bitcoin-backed credit
Strategy describes its preferred securities as "digital credit" — income-focused instruments tied to a capital structure built around the company's Bitcoin treasury. The source material also links STRC's move below $100 this year to leverage in the market and to the company's efforts to keep the security near that level, including buying it back when it trades below $100.
What happens next
Shareholders vote on Oct. 28. If the amendments pass and the updated Delaware certificates are filed, STRC's first daily dividend payment is expected on Nov. 2, with STRF, STRK and STRD expected to follow on Jan. 4.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.