Key Insights:
- A higher dividend could attract buyers but increase Strategy’s annual cash obligations.
- A persistent discount restricts preferred issuance as an efficient fundraising mechanism.
- Continued repurchases consume capital that Strategy could retain or deploy elsewhere.
STRC remained below its $100 stated value on Aug. 21, despite Bitcoin’s recovery above $77,000. The gap increased scrutiny of whether Strategy’s 12% dividend adequately compensates investors for the preferred stock’s downside risk.
Discount persists despite Bitcoin recovery
STRC closed at $95.31 on Aug. 21, leaving the security 4.69% below its $100 stated amount. However, the price has recovered substantially from its June low of $71.25.
Bitcoin traded near $77,125 on Aug. 22 after reaching an intraday high of $78,763. The rebound pushed Bitcoin above Strategy’s average acquisition cost of $75,385. Multicoin Capital co-founder Tushar Jain questioned why the preferred shares had not returned to their intended level. In an Aug. 22 X thread, Jain argued that investors needed greater compensation for the security’s volatility.
MSTR/BTC chart has fully retraced. I don’t think there is a way out of this trend even in a crypto bull market.
DAT mania is over. pic.twitter.com/038elrS2xU
— Tushar Jain (@tushar_jain) August 21, 2026
“STRC has not repegged despite this monster BTC rally because the dividend is way too low,” Jain wrote.
Strategy currently pays a 12% annualized dividend based on the $100 stated value. At $95.31, the $12 annual payout gives investors an effective yield of roughly 12.6%. However, Jain pointed to the security’s roughly 30% drawdown as evidence that the yield may remain insufficient. His argument focuses on the gap between fixed-income positioning and substantial market-price risk.
Dividend policy creates a difficult trade-off
Strategy launched STRC with an offering of over 28 million shares in July 2025. The share price was $90 when investors first bought it and the dividend was 9% annually.
The preferred shares have been on a downward trend toward $100, which prompted management to raise the dividend several times. The annualized rate was pushed up to 12% from 11.5% for record dates from July.
In the past, Strategy made more direct payout adjustment using another mechanism. If the price of a monthly volume-weighted average is below $95, at least 50 basis points would be recommended.
That framework was updated by the company in June. In addition to market yields, management now takes into account credit spreads, bitcoin volatility, reserve coverage and broader capital-market conditions.
On July 27, management advised to keep the rate at 12% until the shares continue to trade around $100. Additionally, Strategy did not plan to issue further underpriced preferred shares, Strategy said.
Jain contended that there would be another financial issue if the dividend was further increased. An increase in the payout would further drive Strategy’s recurring cash needs and may result in less financial flexibility.
Buybacks become Strategy’s alternative
Instead of increasing the dividend again, Strategy turned toward repurchases. During the week ending July 26, the company bought 288,930 shares for approximately $25 million. Between July 27 and Aug. 2, Strategy sold 1,638 Bitcoin for $104.7 million. It directed $52.4 million toward preferred dividends and $52.3 million toward STRC repurchases.
During the following week, Strategy sold another 1,690 Bitcoin for $108.6 million. The company then used the proceeds to repurchase approximately 1.15 million preferred shares. Its financing approach changed again between Aug. 10 and Aug. 16. Strategy raised $333.7 million by selling 3.46 million MSTR shares.
The company allocated $132.2 million toward STRC repurchases and $52.4 million toward dividends. Another $149.1 million went into its U.S. dollar reserve. Those transactions increased Strategy’s cash reserve to approximately $4.80 billion. Meanwhile, its Bitcoin holdings remained unchanged at 840,447 coins.
Strategy acquired those holdings for approximately $63.36 billion, including fees. Its average acquisition price stood at $75,385 per Bitcoin.
Discount tests the Bitcoin funding model
STRC matters beyond the income received by preferred shareholders. Strategy designed its variable dividend partly to encourage the security to trade near $100.
Trading around that level would allow Strategy to issue additional preferred shares without selling them below stated value. Those proceeds could then support additional Bitcoin purchases.
Chief Executive Phong Le previously connected renewed preferred issuance with further Bitcoin acquisitions. Therefore, a lasting discount could constrain one channel supporting Strategy’s Bitcoin accumulation strategy.
Jain also questioned MSTR’s outlook if accretive Bitcoin purchases slow. He argued that common shares could eventually resemble a closed-end fund trading around underlying asset value.
That remains Jain’s market assessment rather than Strategy guidance. Strategy also cautions that its modified net asset value metric differs from traditional accounting measures.
MSTR closed at $119.25 on Aug. 21 after gaining 6.05% during the session. Strategy reported its modified net asset value ratio near 1.00.
Conclusion
For investors, the central issue now extends beyond the headline yield. Preferred holders lack a contractual right to redeem their shares for $100 on demand.
Consequently, investors must weigh dividend income against volatility, liquidity and Strategy’s broader capital structure. MSTR shareholders face separate risks from dilution, debt costs and preferred dividend obligations.
Bitcoin’s recovery has improved Strategy’s treasury position, but it has not eliminated the preferred stock discount. The next test is whether buybacks can close that gap without increasing recurring dividend costs.
