Bitcoin News Today: MSTR Boosts STRC Dividend to 10.75% to Stem Price Slippage

Strategy Inc. (MSTR) has once again raised the dividend on its STRC perpetual preferred stock to 10.75%, the fourth increase since the product's launch in late July. The move follows recent turbulence in both MSTR's common stock and the broader crypto market, including Bitcoin's price decline, which caused STRC to dip below its $100 par value according to reports. The company aims to stabilize STRC's price through monthly dividend adjustments, maintaining it within a narrow range around the $100 target as research shows.

To support these dividends, MSTR announced a $1.44 billion cash buffer, intended to cover nearly two years of preferred dividend obligations. This reserve underscores the company's commitment to maintaining the STRC structure, which pays an annualized 10.75% dividend, distributed monthly in cash. The buffer ensures liquidity for the perpetual preferred stock series, which together account for an estimated $800 million in annualized dividend payments across all preferred shares based on data.

STRC, currently trading at $98.43, has been a key instrument in MSTR's capital-raising strategy, enabling the purchase of Bitcoin while offering high-yield returns to investors according to analysis. However, the recent Bitcoin slump and broader market volatility forced the company to respond with higher yields to attract and retain capital as market observers note. The latest increase brings the dividend to its highest level since the series inception, reflecting the ongoing challenge of keeping STRC near its par price amid macroeconomic headwinds according to analysts.

STRC was designed to offer short-duration characteristics with high yield exposure, but it has been vulnerable to swings in the price of Bitcoin and MSTR's common stock as research indicates. Earlier this year, STRC dipped as low as $90 during a broader market selloff, prompting the latest dividend increase according to data. The company's strategy of issuing preferred stock to fund Bitcoin purchases has come under scrutiny amid rising debt and equity issuance as industry reports show. This dynamic has created pressure on preferred stock valuations, pushing MSTR to raise dividends as a countermeasure according to market analysis.

MSTR's recent Bitcoin buying spree has also contributed to the company's financial complexity. The firm now holds 650,000 BTC, valued at over $48 billion based on its average cost basis. While this positions MSTR as one of the largest corporate holders of Bitcoin, it also raises questions about long-term sustainability in a market prone to volatility according to analysts. Analysts have debated whether the company can continue its capital-raising model without negatively impacting its balance sheet or share price as market participants observe.

What Analysts Are Watching

The latest dividend increase and $1.44 billion cash buffer have drawn attention from market participants and analysts, who are evaluating MSTR's financial strategy for resilience according to market analysis. Benchmark analyst Mark Palmer recently noted that the company's dividend obligations are "quite manageable" given its Bitcoin holdings and capital-raising capabilities as he stated. However, critics argue that the dividend model could pose risks if Bitcoin's price remains weak for an extended period, potentially forcing MSTR to rely on equity sales or asset sales to maintain preferred stock payouts as analysts warn.

Another point of focus is the potential exclusion of MSTR from major indices like MSCI USA and MSCI World as reports indicate. A removal could trigger up to $8.8 billion in outflows, according to JPMorgan estimates, as the company is included in many passive investment products according to financial analysis. MSTR's leadership, including Executive Chairman Michael Saylor, is engaged with MSCI to address the issue, but the decision is not expected until early January as official statements indicate. If MSCI follows through, it could further pressure MSTR's stock price and capital-raising efforts according to market observers.

Risks to the Outlook

Despite the dividend increase and liquidity buffer, MSTR faces several risks that could hinder its strategic objectives. Bitcoin's price remains in a bearish phase, having fallen over 32% from its October peak of $125,000 as data shows. This has heightened concerns about the company's ability to sustain its capital-raising model without further diluting common shareholders or selling Bitcoin at a loss according to market analysis. Additionally, MSTR's stock has declined nearly 40% year-to-date, reflecting broader investor caution as financial reports indicate.

The company's preferred stock program also faces structural challenges. STRC's current trading price of $98.43 indicates that the market has not fully embraced the par value target despite the 10.75% yield according to analysis. If Bitcoin and MSTR's common stock remain under pressure, further dividend increases may be necessary, adding to the company's financial burden as industry experts note. Moreover, the recent liquidity crunch in crypto derivatives markets has highlighted the fragility of leveraged positions and the potential for forced selling, which could further complicate MSTR's capital structure as market data shows.

What This Means for Investors

Investors in MSTR's preferred stock, particularly STRC and STRF, are likely to benefit from the higher dividend yields, which currently exceed 10% as reports show. STRF, for instance, offers a 10% fixed dividend with quarterly payments, making it an attractive option for income-focused investors as financial analysis indicates. However, the lack of voting rights and the potential for price volatility mean that these instruments are not without risk according to market observations.

For common shareholders, the situation is more precarious. MSTR's stock has lost more than 60% of its value since its 52-week high as financial reports indicate, and further declines could force the company to accelerate equity issuance or reduce its Bitcoin purchasing pace. While MSTR has defended its strategy, citing its ample Bitcoin holdings and ability to fund dividends without selling assets as company statements show, the market remains skeptical.