Strategy Keeps Stretch Dividend at 12% Despite Stock Lagging Below Par

Strategy has confirmed that its Stretch (STRC) preferred stock will continue to pay a 12% annualized dividend in August 2026, despite closing July at around 10-11% below its $100 par value. This is the highest rate since the security's launch in July 2025.

The ratchet mechanism behind STRC's dividend increases has been criticized by analysts for creating 'a structure with a finite number of cycles' due to its one-way nature, where the dividend rises whenever the stock trades below $95 but cannot be reversed even if the price recovers. However, CEO Michael Saylor stated that this mechanism is necessary for Strategy's financing needs.

The STRC stock closed at $89.46 on July 31, a slight decrease from its previous close of $89.50. The persistent discount has forced Strategy to pause new STRC issuance through its ATM program, limiting the company's ability to add to its Bitcoin holdings using that specific funding channel.

Analysts have warned about the risks associated with this structure and the concentration risk due to retail investors holding an estimated 83% of outstanding STRC shares. However, Strategy has built financial buffers to offset these concerns, including a liquidity buffer covering roughly 26 months of dividend and interest obligations.