Strategy proposes daily dividend accruals for preferred shares
In brief
- Strategy proposes daily dividend accruals on STRF, STRC, STRK, and STRD, moving from 24 or quarterly record dates to 365 annually.
- Dividends would accrue each calendar day and settle the following business day, with unchanged economics.
- Shareholders vote October 28; STRC record date set for November 1 if approved.
- Strategy paid $255 million in STRC dividends since moving to semi-monthly payments in June.
- Strategy bought $139 million of STRC this month while pausing Bitcoin purchases.
Volatility and execution
Strategy proposed daily dividend accruals as a way to reduce the price volatility that typically precedes dividend payments. When STRC paid monthly, its price fell about 49 basis points on the day before the dividend. After the firm moved to semi-monthly payments in June, that decline narrowed to roughly 36 basis points. The company's logic is straightforward: by distributing dividend accruals evenly across every day of the year, no single payment date becomes a focal point for price weakness.
Michael Saylor, executive chairman, explained the mechanism: "The way that you create low volatility and high liquidity is to shorten the duration of the instrument and to actively manage the credit." Phong Le, president and chief executive, called the proposal "the first global security in the world with calendar day accruals and dividends." If approved, the four preferred shares would be the only securities anywhere paying on 365-day calendar accruals, though five securities globally already offer daily dividends with a combined market value of $15 billion.
Timeline and shareholder backing
A preliminary proxy was filed the same day as the announcement, with a definitive proxy due on October 5 and shareholders voting on October 28. STRC would move first, with a first record date of November 1 and first payment on November 2. For the three paying quarterly, the increase in record dates is put at 90 times. Shareholders backed the previous change to semi-monthly payments with 97.5% of STRC holders and 99.9% of common shareholders approving in June.
Since that June transition, Strategy has paid $255 million in STRC dividends. The firm bought $139 million of STRC this month while pausing Bitcoin purchases, signaling confidence in the preferred shares. Strategy also raised $2 billion selling MSTR stock for a dollar reserve and maintains a framework that could see it sell up to $1.25 billion of Bitcoin to service dividend obligations. Last week, the firm bought a further $76 million worth of Bitcoin, bringing its holdings close to their June record.
