Strategy Inc. Maintains 12% Dividend Rate on STRC Preferred Shares

Strategy Inc., led by Michael Saylor, has announced that the annualized dividend rate for its STRC variable rate preferred shares will remain at 12% for August 2026. This decision was made despite the shares trading below their $100 par value throughout July, and it reflects a recent revision in the company's dividend policy.

STRC shares closed July at $89.46, approximately 10% below their par value. The company transitioned to semi-monthly dividend payments, approved by shareholders in June, making August the second month under this new payment schedule. Previously, a 'ratchet mechanism' would trigger a 0.5% dividend increase if the share price fell below $95. However, following a policy change on June 29, management now considers multiple factors, including market price, credit spreads, competing yields, Bitcoin volatility, cash reserve coverage, and the broader capital structure, when setting the dividend rate.

Strategy CEO Michael Saylor has described STRC as an income-oriented vehicle designed to help investors 'stretch their income,' reiterating the company's long-term objective for the shares to trade consistently around $99-$100. The company has built a substantial cash reserve of $3.75 billion, primarily from monetizing Bitcoin, to fund preferred payouts, which is sufficient to cover dividend payments for over two years.

The decision to maintain the dividend rate, rather than increase it, indicates persistent market pressure on STRC shares, despite a slight rebound in July, as they remain significantly below par. The company's policy of not issuing STRC below $100 per share could restrict new capital-raising avenues. Furthermore, competitive offerings, such as Strive's SATA preferred shares, which reportedly offer around a 13% yield with daily dividend payments, have diverted investor interest away from STRC.

Strategy's STRC preferred shares are intrinsically linked to the company's overarching Bitcoin acquisition strategy, serving as a means to raise capital for Bitcoin purchases. The company leverages its Bitcoin holdings to provide the flexibility needed to fund these dividend payments. However, analysts have raised concerns regarding STRC's structural sustainability and potential legal scrutiny, which could introduce uncertainty into future capital structure flexibility.

In July, Strategy repurchased 288,930 STRC shares for approximately $25 million at an average price of $86.52. Management has stated its intention to recommend maintaining the 12% annualized dividend rate until STRC demonstrates sustained, healthy trading near $100 per share. Market participants will closely monitor whether STRC can return to its par value and how the company navigates this objective in the coming period.