Strategy's STRD: A High-Yield Bitcoin Leveraged Preferred Stock for Volatile Markets

In a market where volatility reigns and investors seek both yield and exposure to digital assets, Strategy (formerly MicroStrategy) has introduced a novel instrument: its 10% Series A Perpetual Stride Preferred Stock (STRD). Priced at $85 per share on June 5, 2025, STRD offers a unique blend of income generation and Bitcoin-linked upside. For risk-tolerant investors, this could be a compelling way to capitalize on Bitcoin's growth trajectory while earning a double-digit yield. Here's why STRD stands out—and what to watch for.

The Dividend Structure: 10% Yield with Caveats

STRD's headline feature is its 10% annual dividend, paid quarterly in arrears starting September 30, 2025. However, there's a critical nuance: the dividends are non-cumulative and non-mandatory. This means Strategy isn't obligated to pay missed dividends, and no interest accrues on unpaid amounts. While this adds risk, the 10% yield (equivalent to a 11.76% effective yield at the $85 issue price) is compelling compared to traditional preferred stocks or bonds.

The non-cumulative structure also forces investors to evaluate Strategy's financial health and Bitcoin strategy. If the company prioritizes Bitcoin purchases over dividends, income seekers must weigh the trade-off between yield and capital appreciation.

Liquidation Preference: A Floating Safety Net

STRD's liquidation preference—a key protective feature—resets daily to the highest of three benchmarks:
1. The stated $100 per share.
2. The prior day's closing price of STRD.
3. The 10-day average closing price of STRD.

This mechanism ensures the liquidation value rises with the stock's market price, shielding investors from downside while allowing upside participation. For instance, if STRD trades above $100, the liquidation preference increases, creating a “buffer” against volatility.

The Bitcoin Link: A Direct Play on Digital Assets

Strategy's Bitcoin thesis is at the core of STRD's appeal. The $979.7 million in net proceeds will fund general corporate purposes, including further Bitcoin purchases. As of June 2025, Strategy holds 580,955 BTC, with an average cost basis of $70,023. Recent buys at $106,495 suggest confidence in Bitcoin's long-term value.

STRD holders effectively gain indirect exposure to Bitcoin's price movements. If Bitcoin rallies, Strategy's balance sheet strengthens, potentially enabling higher dividends or share buybacks. Conversely, a Bitcoin downturn could pressure both the company's equity and STRD's price.

Risks to Consider

1. Dividend Dependency: The non-cumulative dividend structure means investors must rely on Strategy's ability—and willingness—to pay.
2. Junior Status: STRD ranks junior to all existing and future debt, so creditors get priority in a downturn.
3. Bitcoin Volatility: While Bitcoin's upside is a tailwind, its extreme swings could amplify STRD's risks.

Why STRD Could Shine in Volatile Markets

STRD's structure is a bet on two things: Bitcoin's upward trajectory and Strategy's operational resilience. For investors who believe Bitcoin will outperform traditional assets over the long term, STRD offers a leveraged play without needing to hold Bitcoin directly. The 10% yield adds a defensive layer, providing income even if Bitcoin stagnates.

Moreover, the liquidation preference's upward adjustment creates a “floor” for the stock's value, reducing downside exposure compared to pure Bitcoin investments. While not without risks, STRD's dual-income-and-appreciation model could be a standout in portfolios seeking asymmetric returns.

Investment Takeaway

STRD is not a conservative investment. It's best suited for high-risk, high-reward portfolios where investors are comfortable with Bitcoin's volatility and willing to forgo dividend certainty for yield and digital asset exposure. For those bets, the 11.76% effective yield and Bitcoin-linked upside make STRD a compelling alternative to traditional fixed-income instruments.

Monitor Bitcoin's price, Strategy's Bitcoin purchases, and the company's liquidity closely. If Bitcoin stabilizes above $100,000 or Strategy demonstrates disciplined dividend management, STRD could become a market darling. But brace for turbulence—this is high-stakes investing in a high-stakes asset class.

As always, consult with a financial advisor before making investment decisions.