Strategy shareholders approve twice-monthly STRC dividends

Strategy (formerly MicroStrategy) just won shareholder permission to pay its mostly costly dividend twice as often, treating the scheduling change as win for innovation.

This morning, the company announced the approval of moving Stretch (STRC) dividends from monthly to semi-monthly payouts. 

The same 11.50% annualized dividend rate payout now splits into two smaller checks each month of 0.48% apiece.

The first semi-monthly dividend for STRC is scheduled for July 15 — two weeks earlier than the former calendar allowed.

The yield itself doesn’t change. Holders simply get half of the prior $0.96 monthly per share, on the 15th and last days of every month.

Strategy wanted approval and got it

Because retail investors own the overwhelming majority of STRC, the company prominently advertised the vote. Although it didn’t mention its motivation beyond vague shareholder benefits like “stabilize price, dampen cyclicality, drive liquidity, and grow demand,” Strategy itself benefits from semi-monthly dividends.

The campaign worked and the vote passed.

Indeed, timing is everything in markets. This particularly important vote arrived at the best possible time for Strategy. Specifically, STRC closed on Friday 6.6% below its intended $100 price per share.

Immediately, the following business morning, Strategy announced that the next dividend payout would arrive two weeks ahead of schedule.

Prior to this vote, shareholders had more than three weeks until they would have received their dividend. Now, they will receive a new dividend in just five business days.

As a result, Strategy immediately benefited from this new, near-term catalyst. STRC rallied 3.7% by noon.

Although the company might have needed to raise its dividend rate to encourage bids closer to $100, STRC is already rallying today due to its far more near-term payout date — no dividend rate increase needed.

Read more: Strive’s $50M STRC bet is already underwater

What to do with STRC between its dividend snapshot dates

With regularity, STRC tends to trade near $100 on its dividend snapshot date but often drifts lower during the long periods in-between.

The 11.50% annualized dividend rate of STRC will remain the same, and remains higher than typical junk bonds which pay 7% annually. Paying 11.5%, STRC pays a far higher yield than even speculative-grade debt. It just made paying that yield a more frequent event.

Strategy’s STRC pays the highest dividend rate of its four series of preferred shares, above STRK, STRD, and STRF.

Although Strategy certainly benefits from the one-time acceleration of its payout catalyst this week, as evidenced by today’s 3.7% rally in STRC, the semi-monthly periodicity is now public knowledge.

Because markets are forward-pricing mechanisms with participants who discount future events into current bids and offers, STRC traders could rationally collapse its prior one-month cycle of rallying into its ex-dividend date into two, similar cycles per month.

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