Strategy asks shareholders to approve daily dividends on its discounted bitcoin preferred stock

Strategy Inc., the Virginia software company turned bitcoin treasury vehicle, has asked its common shareholders to approve a switch to daily dividend payments on its most troubled preferred stock, a step the board says is meant to help nurse the security back toward the $100 price it was designed to hold.

In a filing with the Securities and Exchange Commission dated Oct. 16, Strategy's board declared conditional daily dividends on the preferred stock, known by its ticker STRC, for every calendar day in November. The payments will only go out if shareholders approve amended charter terms at a virtual special meeting on Oct. 28 and the company files the revised terms before Nov. 1.

A stock built to trade at $100

STRC is one of four preferred shares Strategy has issued since 2025 to raise cash for buying bitcoin without diluting common shareholders, a lineup the company markets as its "digital credit" platform. Unlike the common stock, MSTR, these preferreds are not meant to track bitcoin's price. They are designed to behave more like bonds, trading near a fixed $100 stated value while paying a variable dividend adjusted periodically to keep demand balanced near that price.

That design has struggled this year. STRC has traded below $100 for months, closing at $89 in mid-June with an intraday low of $88.50, according to The Block — the lowest close since the stock's debut in 2025. The persistent discount forced Strategy to pause the at-the-market sales program it normally uses to issue new STRC shares when the stock trades above par, since selling new shares into a discounted market would lock in a loss relative to the $100 target.

The board's pitch for daily payments centers on reducing the "accrued dividend" that builds into each share's price between payment dates and then drains out on the day after a record date, producing a predictable price drop. According to Unchained, Strategy's own investor materials show STRC's median price drop on ex-dividend days fell to 0.36% after the stock moved from monthly to semi-monthly payments in June, down from 0.49% under the old schedule. The board is betting that moving to daily payments, which shareholders approved for the monthly-to-semi-monthly switch by a 99.9% vote in June, will smooth the pattern further and keep the stock closer to par.

The mechanics, and what happens if the vote fails

Under the Oct. 16 filing, STRC would pay out roughly $1 per share across November at its current 12% annualized rate, split into daily amounts of three or four cents depending on the day, with payment due the business day after each record date. If the Oct. 28 vote fails, or the amended terms are not filed in time, the daily dividends are void, STRC instead pays a dividend already declared for a Nov. 15 record date, and the company says it expects to keep paying on the existing semi-monthly schedule. The filing is explicit that both schedules cannot take effect at once.

Per the company's definitive proxy statement, only holders of common stock as of a Sept. 25 record date may vote, and preferred shareholders — who the company has said make up roughly 80% retail investors, a far higher share than on the common stock — have no say despite being the ones affected. Approval requires more than half of all outstanding common voting power to vote yes, a bar that not voting effectively counts against. Executive Chairman Michael Saylor controls about a third of that voting power through supervoting Class B shares.

A shift from Saylor's "never sell" pledge

The dividend mechanics are the latest sign of strain in a strategy that depends on Strategy continuing to raise cash faster than it spends on preferred dividends. Saylor, who built his reputation on a pledge to never sell the company's bitcoin, told analysts on the company's first-quarter earnings call in May that the company would likely need to start doing exactly that to cover STRC's payments if market conditions did not improve.

"We'll probably sell some bitcoin to fund the dividend, just to inoculate the market, just to send the message that we did it," Saylor said on the call, according to The Block.

Saylor and chief executive Phong Le have argued the company's roughly 848,000 bitcoin, bought for an average of about $75,444 per coin according to the company's own purchase disclosures, give it room to cover dividend obligations as long as bitcoin's price appreciates by at least 2.3% a year. Le has said the company does not intend to become a forced seller and wants to remain a "net aggregator" of bitcoin even as it leans more on the preferred-stock dividends to fund purchases rather than selling new common shares.

What happens next

Voting on the proposal opened Oct. 5 and closes at 11:59 p.m. Eastern on Oct. 27, ahead of the next morning's special meeting. A related proposal would also move Strategy's three other preferred series — STRF, STRK and STRD, which currently pay quarterly — onto the same daily schedule starting in January, though that portion of the plan does not affect the November timeline for STRC.

STRC shares and the broader preferred-stock lineup can be tracked on Nasdaq's listing page for the security. The stock has roughly $9.3 billion in notional value outstanding, per Unchained's reporting on the company's investor materials, so even a modest shift in investor confidence is a meaningful test of whether the smoother payment schedule can narrow the gap to par — or whether the discount reflects deeper doubts about Strategy's ability to keep funding its preferred dividends without eventually selling the bitcoin it has spent five years accumulating.