Strategy Proposes Daily Dividend Accruals for STRC

Strategy's proposal to change how dividends are accrued and paid on its preferred securities could bring about a significant shift in the way investors interact with STRC. The company, led by Michael Saylor, aims to move from monthly, semi-monthly, or quarterly dividend schedules to daily accruals.

The accumulated amount would then be paid on the next business day, which Strategy refers to as the next evolution of its 'digital credit' products.

This change is aimed at making Strategy's preferred securities more like liquid cash/yield instruments by using daily dividend accruals to reduce price volatility, improve liquidity, and potentially boost demand.

For STRC, Strategy aims to keep the price near its $100 par value through share sales above $100 and buybacks below $100. This came after the company shifted from monthly to semi-monthly dividends, which reduced ex-dividend price drops from 49 to 36 basis points.

However, if this proposal is approved, STRC would move from 24 record dates a year to 365, or 366 in leap years, while STRF, STRK, and STRD would shift from four quarterly record dates to daily accruals. This means dividends would accrue about 15 times more frequently for STRC and 90 times more frequently for the other three preferreds.