Strategy seeks shareholder approval for daily dividends on four preferred stocks
The bitcoin treasury company wants dividends paid every calendar day on STRF, STRC, STRK and STRD, with a shareholder vote set for 28 October.
Key points
- Strategy is asking stockholders to approve daily dividends on four preferred stocks: STRF, STRC, STRK and STRD.
- Dividends would accrue every calendar day, including weekends and holidays, and be paid the next business day.
- A shareholder meeting to vote on the proposal is scheduled for 28 October.
- Strategy said the change could reduce reinvestment lag, enhance liquidity and market efficiency, and increase price stability.
- The company last week bought 950 bitcoins for $75.7 million, its first purchase since August, and its Nasdaq-listed MSTR stock is down nearly 50% over the past year.
Strategy, the largest corporate holder of bitcoin, wants to pay daily dividends on four of its preferred stocks, Bitcoin Magazine reports. The company said on Friday that it is asking shareholders to approve the move, which would pay investors dividends every calendar day, including weekends and holidays, on STRF, STRC, STRK and STRD. Stockholders will vote on the proposal at a meeting on 28 October.
According to the report, the daily dividends would accrue every calendar day and be paid the next business day, with the economics of the instruments unchanged. Strategy said in a statement that if the plan is approved and adopted, it believes it would reduce reinvestment lag, enhance liquidity and market efficiency, and increase price stability. The company also said the changes aim to support price stability, liquidity and demand.
Strategy argued the move would help both preferred and common stockholders. The company said the enhancements could benefit common stockholders by making its Digital Credit instruments more attractive and useful, supporting its ability to access preferred equity capital efficiently and expanding the capital markets toolkit it uses to execute its Bitcoin Treasury strategy.
Daily payout proposal
Strategy, formerly known as MicroStrategy, is an enterprise software company that pivoted to buying and holding bitcoin in 2020. It first bought the cryptocurrency to protect shareholders from inflation, and has since bought the asset aggressively while shifting to a bitcoin treasury model. Investors can buy its shares for heightened exposure to bitcoin, or receive a yield through its digital credit products.
The company had bought bitcoin every Monday but slowed its purchases this year as the largest cryptocurrency fell into a bear market, Bitcoin Magazine reports. It instead focused on protecting its balance sheet and sold chunks of its bitcoin. It announced a programme under which it may sell BTC from time to time to generate up to $1.25 billion in proceeds for the USD reserve, and to fund preferred stock dividends, interest expenses or repurchases.
In a filing on Monday, Strategy said it bought 950 bitcoins for $75.7 million last week, its first purchase since August. Its Nasdaq-listed stock, MSTR, is down nearly 50% over the past year after bitcoin's price fell, though it has appreciated by nearly 1,000% since the company began buying bitcoin in 2020.
Capital raising strategy
The vote matters because the preferred stocks are central to how Strategy raises capital for its bitcoin holdings. Daily accrual could make those instruments more appealing to income-focused investors, but the outcome rests with shareholders at the October meeting.