Strategy (MSTR) on Monday announced a further 25 basis points increase in the dividend yield on its STRC preferred series to 10.75%. This is the fourth rate hike since the IPO was launched at the end of July.
One of Strategy’s perpetual preferred stocks, STRC or “Stretch,” is designed to provide short-term characteristics and high-yield exposure. The company currently pays an annual dividend of 10.75%, paid out in cash every month. The dividend rate adjusts monthly to encourage trading around the STRC $100 face value and limit price fluctuations.
When STRC launched in July, it had an initial dividend yield of 9% and an IPO price of $90. The company subsequently raised its dividend yield twice to 10.25%, but STRC still has not reached face value. A third rise eventually took the price to $100, but a collapse in the price of Bitcoin and Strategy common stock hit STRC, which fell to around $90 during the November panic, triggering the latest rise.
At press time, STRC was trading at $98.43.
The updated dividend rate was announced alongside news of a $1.44 billion cash buffer designed to fund perpetual preferred stock dividends. Total annualized dividends on all perpetual preferred stock are approximately $800 million. According to an investor presentation, the company has 74 years of dividend coverage, as measured by its $59 billion in Bitcoin reserves. Even so, cash reserves of $1.44 billion are expected to be a major source of near-term dividend funding.
