Strategy Plans Daily Dividend Payouts for Preferred Stock to Lower Borrowing Costs
Strategy Inc Class A (MSTR) is planning to switch dividend payments on its flagship preferred stock to a daily schedule, including weekends. Executive Chairman Michael Saylor said the company aims to follow a move pioneered by rival Strive, Inc. Class A (ASST), which began paying daily cash dividends on its own preferred stock earlier this year. Strategy's board conditionally declared a 12% annual dividend rate for November, subject to shareholder approval on October 28.
Saylor explained that daily cash payouts attract fresh investor capital and help stabilize the preferred stock near its $100 target price. Strategy currently pays a yield roughly 700 basis points above 10-year Treasuries, but Saylor expects that spread to narrow by 200 to 300 basis points over time. A tighter yield spread reduces borrowing costs, making it easier to issue credit and acquire more Bitcoin (BTC).
Shareholders will vote on the proposed daily dividend structure on October 28. If approved, daily payments will begin in November as Strategy seeks to maintain consistent trading around its target valuation, backed by cash reserves covering about three and a half years of dividend payments.
Key points
- Strategy Inc Class A (MSTR) plans to pay daily dividends on its STRC preferred stock starting in November, pending shareholder approval on October 28.
- Executive Chairman Michael Saylor cited rival Strive, Inc. Class A (ASST) as demonstrating strong investor demand for daily dividend payouts.
- Strategy's board set a conditional 12% annual dividend rate for STRC in November to help keep trading prices near the $100 par value.
- Lowering STRC yield spreads over Treasuries aims to reduce capital costs so Strategy can buy additional Bitcoin.
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Why is Strategy switching to daily preferred stock dividends?
Strategy aims to attract new investors, lower its borrowing costs, and help its STRC preferred stock trade closer to its $100 target price. Executive Chairman Michael Saylor said daily payouts tap into broader capital demand to support the company's Bitcoin purchases.
When will Strategy shareholders vote on the daily STRC dividend plan?
Strategy shareholders are scheduled to vote on the daily STRC dividend plan on October 28. If approved, the company will pay a conditionally declared 12% annual dividend rate on a daily basis throughout November.
How much cash reserve does Strategy hold for preferred dividends?
Strategy holds about 3.5 years of cash reserves dedicated to paying preferred dividends, after learning that credit investors prioritize cash reserves over Bitcoin holdings during market fluctuations.