Strategy will keep the dividend rate on its STRC preferred shares at 12% for August, holding the payout steady even as the Nasdaq-listed security ended July at $89.46, well below its $100 stated value.
The decision extends a policy test for Strategy’s newest income-focused preferred stock. STRC’s dividend is now paid twice a month following a shareholder vote in June, making August the second full month under the semi-monthly schedule. Strategy raised the annualized dividend by 50 basis points to 12% at the start of July after the shares weakened in June, but management has not announced another increase for August.
Executive chairman Michael Saylor disclosed the August dividend update in a Saturday social-media post. One day later, Saylor posted “Bitcoin Drive engaged” with a chart of the company’s previous Bitcoin purchases, continuing his regular pattern of posting ahead of or alongside Strategy’s Bitcoin acquisition announcements.
Price remains below management’s target range
STRC gained 5.42% during July, yet the recovery left it more than 10% below par. The shares closed Friday at $89.46, while trading volume was about two-thirds of its average daily level, according to the figures provided by Strategy’s market update.
Phong Le, Strategy’s chief executive officer, said Friday that management wants STRC to trade between $99 and $100 over time. He did not give a date for reaching that range.
That target places the company’s focus on restoring the preferred shares’ market price rather than repeatedly raising their yield. A dividend increase can make a preferred stock more attractive to income-focused traders, but it also raises Strategy’s recurring cash obligations. Keeping the rate at 12% gives management time to assess whether July’s increase, combined with share repurchases, can narrow the discount to par.
Strategy has previously increased STRC’s dividend when the shares traded materially below $100 for an extended period. Maintaining the payout this month suggests that the company is relying on more than dividend adjustments to support the security.
Buybacks add a second support mechanism
Strategy recently repurchased $25 million of STRC shares below par value and said it intends to continue buying shares while they trade under $100. Repurchases at a discount reduce the number of preferred shares outstanding and can lower the future dividend burden attached to those shares.
The company has also announced a $1 billion authorization for further buybacks, according to the supplied account. If used for STRC, such a program could create consistent demand in a market where trading volumes remain relatively limited compared with large-cap common stocks.
The approach is financially distinct from buying back ordinary shares. STRC is preferred equity, meaning its holders receive scheduled dividends and rank ahead of common shareholders in the company’s capital structure. Strategy’s decision to retire these shares below their stated value can reduce obligations, though it also uses cash that could otherwise be held in reserve or deployed toward Bitcoin purchases.
The company’s stated willingness to buy STRC under $100 effectively makes the market discount a capital-allocation opportunity. It does not guarantee the shares will return to par, particularly if traders demand a higher yield to compensate for Strategy’s Bitcoin exposure and the structure of its preferred securities.
Reserve is designed to cover fixed payments
Strategy reported holding a $3.75 billion U.S. dollar reserve, which it said was sufficient to cover more than two years of preferred dividends and interest obligations. The reserve is intended to support payments linked to the company’s Bitcoin monetization strategy, giving it a pool of dollars that is separate from the day-to-day market value of its Bitcoin holdings.
That cushion has become more relevant after Strategy reported an $8.22 billion net loss in the second quarter. The company attributed most of the loss to an $8.32 billion unrealized decline in the value of its Bitcoin holdings as Bitcoin’s price fell during the reporting period.
An unrealized loss does not itself require Strategy to sell Bitcoin. It reflects an accounting revaluation of assets the company continues to hold. Yet a large decline in the value of those holdings can influence how the market assesses Strategy’s ability to sustain preferred payouts, fund acquisitions, and manage the leverage embedded in its capital structure.
Strategy said it holds 843,775 Bitcoin after acquiring 174,895 additional coins earlier in the year. The scale of that position keeps the company’s balance sheet highly sensitive to Bitcoin’s price movements, even with the dollar reserve in place.
Preferred holders face a different Bitcoin trade
STRC offers traders a route to Strategy’s Bitcoin-centered business model through a fixed-income-style instrument rather than direct ownership of Bitcoin. That can appeal to buyers seeking scheduled distributions, but it also introduces company-specific risks: dividend policy, trading liquidity, the market discount to par, and Strategy’s decisions on debt, preferred stock issuance, and Bitcoin purchases.
Direct Bitcoin holders do not face those issuer-level obligations, while STRC holders are not exposed to Bitcoin in the same straightforward way. Their returns depend partly on whether Strategy can keep paying the dividend and whether the shares move closer to their $100 target.
For August, the company’s message is clear: STRC’s 12% rate will remain unchanged while Strategy uses its cash reserve and discounted repurchases to address the gap between the shares’ market price and par value.
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