Strategy holds STRC dividend at 12% as price hovers under $90
Strategy Inc. has chosen to lock in a 12% annual dividend on its STRC preferred stock for August 2026, even though the Nasdaq-traded security continues to change hands well below its $100 stated value. STRC finished trading on July 31 at $89.46, more than 10% under par, yet the company opted not to raise the payout again, leaning instead on share repurchases and a sizeable cash buffer to support the market.
According to the company’s official materials, the variable annualized dividend rate for STRC record dates beginning in August remains fixed at 12%. Executive Chairman Michael Saylor highlighted the product on August 1 as an income-enhancement tool, underscoring its twice-monthly payment schedule that breaks the annual yield into two regular cash distributions each month.
At the July 31 close of $89.46, the $12 annual dividend-set as 12% of the $100 stated amount-translates into an effective yield of roughly 13.41% for investors buying at market. That elevated yield reflects the ongoing price discount rather than an increase in the nominal payout. Because the August decision was announced over a weekend, trading data will only show how investors respond once Nasdaq markets reopen.
The August decision follows a July move in which Strategy lifted STRC’s annual rate from 11.5% to 12%. That earlier hike came after a steep sell-off in June that dragged the shares down to $71.25 at the low, leaving them dramatically below the $100 level management has repeatedly described as its preferred trading range for the security.
However, Strategy revised its approach to setting STRC’s dividend on June 29. Under the updated framework, the company no longer treats a discount to par as an automatic trigger for raising the rate. Instead, management now weighs a broader set of factors: the market price of STRC, credit spreads, competing fixed-income yields, Bitcoin price volatility, the coverage provided by Strategy’s cash reserves, and the overall capital structure. The filing explicitly notes that the firm is not obligated to boost the dividend simply because STRC is trading below $100.
This policy change explains why July’s persistent discount did not yield an additional 50-basis-point increase for August. During its second-quarter update, Strategy said it intends to keep the STRC rate at 12% until the preferred shares demonstrate “sustained, healthy trading” around par. That phrasing outlines a goal rather than a promise; it signals what the company wants to see in the market, but it does not guarantee that STRC will return to $100 or that the rate will automatically adjust when it does.
By freezing the rate at 12%, Strategy is also drawing a line under the rapid growth in its cash outlays. Each additional 0.50 percentage point of yield would represent a meaningful step-up in annual payments on more than $10.46 billion in outstanding STRC stated value. Holding the rate steady keeps those obligations from spiraling higher while the company experiments with other ways to support the security.
One of those tools is a more active buyback program. Instead of relying solely on yield sweeteners, Strategy has been repurchasing STRC on the open market at discounted prices. Between July 20 and July 26, the company bought back 288,930 STRC shares for about $25 million, paying an average of $86.53 per share. That repurchase price reflects a 13.47% discount to the $100 stated amount, allowing Strategy to retire preferred capital at a significant markdown.
Roughly $975 million remains available under the company’s $1 billion authorization for preferred-securities repurchases. Management has signaled that it plans to continue buying STRC when it trades at deeper discounts and will likely slow or halt repurchases as the price approaches $100. The authorization is flexible: it does not obligate Strategy to deploy the full amount, nor does it come with a fixed expiration date, giving the company discretion to adjust its pace based on market conditions and liquidity needs.
Buybacks executed below par carry several benefits for existing holders. They reduce the number of preferred shares outstanding, which, in turn, lowers the total amount of future dividend payments Strategy must cover. In accounting terms, the firm is effectively extinguishing $100 of stated value for less than $100, capturing an economic gain. At the same time, these repurchases consume capital that could otherwise support dividends, service debt, or be deployed into additional Bitcoin if and when the company resumes its accumulation strategy.
To fund the initial $25 million STRC repurchase, Strategy did not issue new preferred stock. Instead, it raised liquidity while simultaneously increasing its U.S. dollar holdings and keeping Bitcoin purchases on hold. A significant portion of that cash came from selling shares of the company’s common stock rather than expanding STRC’s footprint, signaling a preference to avoid diluting the preferred base while still reinforcing the balance sheet.
As of July 26, Strategy reported a U.S. dollar reserve of $3.75 billion. Management estimates that this cash pool is sufficient to cover around 2.1 years of anticipated preferred-stock dividends and interest payments on the company’s outstanding debt. The reserve is ring-fenced: it is earmarked exclusively for these financial obligations unless the board of directors authorizes a different use.
The importance of this cash cushion has grown as Strategy’s preferred commitments have ballooned. During the second quarter, the company booked $400.7 million in preferred dividends, a massive increase from $49.1 million in the same period a year earlier. Cumulatively, Strategy has now paid or declared more than $1 billion in preferred distributions, illustrating just how central STRC has become to its capital-raising strategy.
At the same time, Strategy reported a second-quarter net loss of $8.22 billion, driven largely by an $8.32 billion unrealized loss tied to its Bitcoin holdings. While this accounting charge does not reflect an equivalent cash loss, it does highlight the volatility embedded in the company’s balance sheet. By contrast, STRC dividends must be paid in U.S. dollars, regardless of short-term swings in Bitcoin prices or non-cash mark-to-market adjustments.
Because of these growing obligations, the company has authorized the sale of Bitcoin when necessary to replenish the reserve, fund preferred dividends and interest, or finance additional authorized repurchases of STRC. Through July 26, Strategy had sold approximately $218.4 million worth of Bitcoin in 2026 specifically to help cover parts of its preferred commitments and related cash needs.
As of July 26, the firm held 843,775 BTC at an average acquisition cost of about $75,476 per coin. This enormous Bitcoin position is central to Strategy’s identity and plays an indirect role in how investors perceive the risk of STRC. While preferred dividends are backed by the U.S. dollar reserve in the near term, the long-run capacity to maintain or refinance these obligations is tied to the company’s underlying asset base, including its cryptocurrency holdings.
What the 12% STRC dividend means for investors
For existing STRC holders, the decision to maintain the 12% rate while the security trades below $90 creates a yield that is higher than the headline figure suggests. With the effective yield approaching the mid-13% range at recent prices, income-focused investors are being paid a premium to accept market and credit risk, as well as exposure to Strategy’s Bitcoin-centric balance sheet.
The twice-monthly payment structure also distinguishes STRC from traditional preferred issues that typically pay quarterly. More frequent cash flow can be attractive for investors managing ongoing expenses or seeking to smooth their income throughout the year. However, this benefit comes with the need to closely monitor the issuer’s financial health, since a high yield alone does not eliminate the possibility of volatility or capital loss.
At the same time, investors should recognize that the new policy framework removes the previous quasi-automatic link between a sub-par price and a higher dividend. The company has signaled that it will not perpetually “chase” the market down with ever-richer payouts. In other words, if STRC were to fall further below $100, a dividend increase is now only one of several possible responses, not an assumed outcome.
Why Strategy leans on buybacks instead of more hikes
By pivoting toward buybacks, Strategy is trying to address both market pricing and long-term cost. Repurchasing shares at a discount immediately improves key metrics such as dividend coverage per share and reduces the face value of preferred capital outstanding. From management’s perspective, it may be more efficient to retire obligations at 86-90 cents on the dollar rather than add more percentage points to a dividend it expects to pay for years.
This approach also gives the company more control over timing. Dividends, once declared at a higher rate, create a recurring, fixed obligation until the rate is changed again. Buybacks, by contrast, can be dialed up or down month to month, depending on liquidity, market prices, and other corporate priorities. That flexibility becomes crucial in an environment where Bitcoin prices and capital markets can move quickly.
The role of the $3.75 billion cash reserve
The substantial dollar reserve has emerged as a cornerstone of Strategy’s message to income investors. By emphasizing that it has more than two years of preferred dividends and interest payments already set aside, the company aims to reassure STRC holders that near-term distributions are insulated from short-term crypto market turbulence.
However, investors should understand that this reserve is not unlimited. As payments go out each month, the cushion shrinks unless it is replenished through operations, capital raises, or asset sales such as Bitcoin disposals. The policy allowing Bitcoin sales to refill the reserve introduces another lever, but it also connects STRC’s long-term safety to the performance and liquidity of the crypto market.
Balancing Bitcoin strategy with fixed obligations
Strategy’s model rests on a delicate balance: on the one hand, it behaves like a leveraged Bitcoin holding company; on the other, it has committed to substantial fixed cash distributions via its preferred stock and debt. When Bitcoin prices are strong, this structure can look appealing, as the asset base appreciates while financing costs remain relatively fixed. When prices fall or remain volatile, the tension between long-term accumulation and near-term obligations becomes more visible.
The recent decision to pause Bitcoin purchases while raising dollars and buying back STRC reflects this balancing act. Management appears to be prioritizing financial stability and income credibility over aggressive accumulation, at least in the short term. For STRC holders, that may be a welcome signal that the company is willing to trade some growth optionality for a stronger funding profile.
How STRC could trade going forward
If Strategy succeeds in nudging STRC back toward its $100 target, today’s elevated yield could compress as the price rises, even if the 12% stated rate remains unchanged. That scenario would reward current buyers with both income and potential capital appreciation, while gradually reducing the effective yield for new investors closer to 12%.
Conversely, if the market continues to discount STRC, the buyback program gives the company a tool to exploit those lower prices-retiring more preferreds per dollar spent. Yet sustained weakness would also test the limits of the dividend policy and the cash reserve, especially if macro conditions or crypto prices were to deteriorate sharply.
What to watch next
For those tracking STRC, several indicators will be critical over the coming quarters:
– The pace and scale of further STRC repurchases under the remaining $975 million authorization
– Any revisions to the 12% dividend rate as the market price moves closer to or further from $100
– Changes in the $3.75 billion U.S. dollar reserve as dividends, interest, and buybacks draw it down
– The level and realized gains or losses on Bitcoin sales used to support cash obligations
– Overall profitability and cash generation from Strategy’s non-Bitcoin operations, if any
Taken together, these factors will determine whether Strategy can sustain its current approach: a high, but now stable, dividend rate; opportunistic buybacks below par; and a large but finite cash cushion backing its promises. For now, the company is signaling that it will defend STRC’s income profile with a combination of yield, repurchases, and reserves-while leaving room to adjust as market conditions evolve.