STRC Preferred Dividend Remains at 12% Despite Trading Below Par Value
Shareholders have historically seen increased payouts when STRC preferred shares have traded substantially beneath their $100 par value throughout a monthly period.
Despite Strategy's preferred STRC shares finishing July significantly beneath their $100 par value, shareholders received notification that the August dividend rate will remain unchanged, staying at 12%.
In a Saturday tweet, executive chairman Michael Saylor announced the news, maintaining his promotion of STRC as a vehicle to "stretch your income." The August payout marks the second consecutive month that dividends will be distributed semi-monthly, a modification that received shareholder approval in June.
At Friday's close, STRC shares stood at $89.46, recording a monthly gain of 5.42% for the period that kicked off with a dividend increase — an upward adjustment of 50 basis points to 12% — following weak share performance throughout June. Trading volume for the Nasdaq-listed shares on Friday represented approximately two-thirds of the typical daily trading activity.
Strategy CEO Phong Le restated on Friday that the company's "corporate objective is for STRC to trade at $99-$100 over time," though he provided no specific timeline regarding when shareholders could anticipate reaching that target.
Building cash reserve to make preferred payouts
Meanwhile, Saylor took to social media platforms on Sunday to hint at the prospect of an upcoming announcement regarding modifications to the company's Bitcoin treasury position. His X post stated "Bitcoin Drive engaged," adhering to his customary practice of sharing a visualization of Strategy's BTC acquisitions from Saylortracker.com at the beginning of each week.
During the previous week, Strategy disclosed an $8.22 billion net loss for the second quarter, attributable predominantly to an $8.32 billion unrealized loss on its Bitcoin (BTC) portfolio as the digital currency's valuation decreased throughout the three-month period.
The Bitcoin treasury company said it has built a $3.75 billion cash reserve to support preferred stock payouts following the launch of its BTC monetization program.
Additionally, Strategy announced it has accumulated a $3.75 billion U.S. dollar reserve, a sum sufficient to satisfy more than two years worth of preferred dividend distributions and interest commitments. The organization recently executed a $25 million buyback of its STRC preferred shares at prices below par and indicated its intention to pursue additional purchases of these securities as long as they continue trading beneath $100.