Key Takeaways
- Strategy held STRCs dividend rate at 12% for August 2026, its highest rate since the July 2025 launch.
- STRC closed at $89.46 on July 31, about 10-11% below its $100 par value.
- Experts have warned the ratchet mechanism creates “a structure with a finite number of cycles.”
A Rate That Keeps Climbing but Cant Reverse
Strategy (Nasdaq: MSTR) Executive Chairman Michael Saylor confirmed on August 1 that the Stretch Dividend Rate for STRC, the companys Variable Rate Series A Perpetual Preferred Stock, will hold at 12.00% for August 2026. STRC launched in July 2025 at a 9% rate and has climbed through seven consecutive monthly increases since, reaching 12% for record dates beginning July 1, 2026.
Image source: X
The increases follow a ratchet mechanism, i.e. the dividend rises 0.5% whenever STRC trades below $95, and once triggered, an increase cannot be reversed even if the price recovers. Strategy resets the rate monthly to push STRCs price back toward its $100 par value and strip out volatility, a mechanism the company depends on to issue new STRC shares through its at-the-market (ATM) program and raise fresh capital for bitcoin purchases.
STRC is one of several preferred stock instruments, alongside STRK, STRF and STRD, that Strategy has issued to fund its bitcoin acquisitions without diluting common shareholders as heavily as issuing more MSTR stock would. Strategy also shifted STRC to a semi-monthly dividend payment schedule, with the first twice-a-month payout landing on July 15, 2026, replacing the single monthly payment investors had received since the July 2025 launch.
Still Stuck Below Par
The mechanism has not worked as intended. STRC closed at $89.46 on July 31, down slightly from a previous close of $89.50, putting the stock roughly 10 to 11% below par even at the highest dividend rate in its history. The stock touched a low of $71.25 in June and has not traded at par since mid-May.
Competition has added pressure with rival Strives SATA preferred security offering a roughly 13% yield with daily dividend payments and no underlying debt, drawing investor demand away from STRC even before its June price collapse. The spread between the two securities has widened to one of the largest gaps on record, with SATA trading near its own $100 par value while STRC lags well behind it.
The persistent discount has forced Strategy to pause new STRC issuance through its ATM program, limiting the companys ability to keep adding to its bitcoin holdings using that specific funding channel.
STRC‘s struggles have tracked bitcoin’s own volatility this year. The preferred stock has historically moved in tandem with bitcoins price, and weakness in the underlying asset has made it harder for Strategy (Nasdaq: MSTR) to keep STRC anchored near par even with a record-high dividend rate attached to it.
Warnings Galore
Analysts at Onramp Bitcoin cautioned that the ratchet structure carries long-term risk given it only moves in one direction, with CEO Michael Tanguma pointing out:
A capital structure that survives volatility only by adding permanent obligations is a structure with a finite number of cycles in it.
Rosen Law Firm opened an investigation on June 25 into whether Strategy can sustain its preferred dividend payments if bitcoin remains below the companys roughly $75,651 average cost basis. Adding to the concentration risk, retail investors hold an estimated 83%, or about $8.8 billion, of outstanding STRC shares, a base analysts have flagged as more prone to reactive selling during downturns than institutional holders.
Strategy has built financial buffers to offset those concerns. The company holds a liquidity buffer covering roughly 26 months of dividend and interest obligations, after adopting a Digital Credit Capital Framework in late June that authorized $2 billion in combined preferred and common stock buybacks alongside a bitcoin monetization program.
That program lets Strategy sell bitcoin when management deems it advantageous, with proceeds directed toward reserves, dividends and share repurchases, though the company has stressed it carries no obligation to sell.