Strategy Inc. shareholders voted on 28 October to let the company pay dividends on its Stretch ( STRC ) preferred stock every calendar day, a change the company said would reduce reinvestment lag, improve liquidity and “increase price stability”. STRC has not closed at its $100 stated value since May, falling to $71.25 in June before ranging in the $90s from August; it closed at $99.34 yesterday. Preliminary results show the motion has passed according to a 28 October 8-K filing , with 99.3 percent of votes cast in favour, according to an X post from Strategy Founder and Chairman Michael Saylor. STRC is expected to move from twice-monthly payments to a daily dividend schedule from 1 November, with the first payment due 2 November. Strategy’s three other listed preferred equity instruments, STRF, STRK and STRD, follow on 1 January, according to the filing. Strategy believes the daily dividends will help reduce the volatility of its preferred shares. “When Stretch was [paid] monthly, we would see ex-dividend date, the day before the dividend date, about a 49-basis point decrease in price of the instrument,” Phong Le, president and CEO of Strategy, said, according to a proxy filing with the SEC on 25 September. In general, a share bought on or after the ex-dividend date misses the next payment, so the price dips that day. By moving to daily dividends, the selling pressure should be spread throughout the month. “When we moved to semi-monthly,” Le continued, “what we saw is on the ex-dividend dates about a 36-basis point drop in the price of the instrument. So that already was an improvement, and by moving to daily, we believe that this could also lead to lower volatility.” Strive’s Approach to Preferred Shares The idea is not Strategy’s. Strive Inc., the Dallas-based bitcoin treasury company run by Matt Cole, switched its SATA preferred to daily payments on 16 June and has since trademarked the phrase “The Daily Dividend Company”. Like Strategy, Strive is seeking to make its preferred shares more attractive to investors, although its approach extends beyond dividend frequency. Strive’s version has two layers. SATA , the senior preferred, is the STRC analogue: a preferred stock paying a variable dividend, currently 13 percent, with a target value of $100. SATS is the junior preferred, paying a fixed 15 percent annual dividend with its value set by the market. The seniority difference indicates what would happen in a company liquidation. Any creditors would be paid first (although Strive currently has no debt) followed by holders of SATA — the senior preferred — then SATS and finally common equity. Investors hold different levels of seniority according to their risk tolerance and mandate. At the Future of Capital Markets Summit in Lugano on 22 October, Strive CEO Matt Cole said that investors in SATA are mostly high-net-worth retail investors looking for income. SATS, on the other hand, appeals to investors for whom fixed yield is paramount. Even though each SATS share carries a $100 face value and a fixed $15 annual dividend, the company sold 7 million of them at $90 apiece in October, raising about $630 million. Launching below face value is the standard playbook for these instruments rather than a distress signal: Strategy’s STRC was first launched at $90, for example. The lower launch price helps the market “warm up” to a new instrument. Why Price Stability Matters for Bitcoin Accumulation These preferreds are a funding tap. Both companies buy bitcoin with cash raised by selling new shares, increasingly through at-the-market programmes, standing arrangements under which brokers drip stock into the open market at whatever price buyers will pay. Strive’s $630 million SATS IPO, which closed on 20 October, paid for its largest purchase yet: 6,182 BTC for about $511 million between 17 and 23 October. Three days later it filed to sell up to $1 billion more SATS through an ATM programme, with proceeds earmarked for general corporate purposes including bitcoin. The corporate accumulation game is spreading. Industry tracker SatsIntel counts 180 listed companies holding bitcoin, with a combined 1.3 million coins, about 6.2 percent of the eventual supply. Strategy alone holds 848,517, roughly two-thirds of the corporate total. The next three are within a thousand coins of each other: Japan’s Metaplanet, Twenty One Capital and Strive. For some of these companies, the core strategy is based on the view that the price appreciation of bitcoin will outpace dividend payments and that, by hoovering up supply, these companies help bring about the conditions for that appreciation. But it cuts both ways. If the market demands discounts on these instruments, the flywheel grinds to a halt and they may be forced to sell bitcoin to cover payments, weakening the balance sheets that back the paper. Strategy has already been there. It sold nearly 7,000 BTC earlier this year to help pay preferred dividends, and its board has authorised further sales to fund dividends and buybacks. Strategy expects daily dividends to dampen volatility and let holders reinvest continuously, keeping STRC, SATA and others on the right side of bitcoin accumulation. STRC’s new daily dividends change when holders are paid, not how much. The main gain is price stability: Strategy and Strive want STRC and SATA to hold near $100, and smoothing the ex-dividend step is an efficient method of lowering volatility, enabling the issuance of additional instruments to acquire more BTC. The post Strategy, Strive and the Daily Dividend Race appeared first on Bitfinex blog .
