MicroStrategy plans daily dividend payments for preferred shares
Executive chairman Michael Saylor proposes moving four U.S. preferred shares to a 365-day calendar accrual schedule to reduce volatility.
Quick Look
- MicroStrategy aims to transition four preferred share classes to daily dividend payments to lower volatility and increase liquidity.
- Shareholders are scheduled to vote on the proposal on October 28, with potential implementation beginning in November.
AI-generated summary
Why It Matters
MicroStrategy previously moved STRC dividends to a semi-monthly schedule in June. The company has paid $255 million in STRC dividends to date.
Bitcoin treasury firm Strategy wants to pay dividends on its four U.S. preferred shares every day, including weekends and public holidays, executive chairman Michael Saylor said on Thursday.
The proposal covers STRF, STRC, STRK and STRD. Dividends would accrue every calendar day and pay the following business day, with the economics otherwise unchanged. A preliminary proxy was filed the same day, a definitive proxy is due on October 5, and shareholders vote on October 28.
STRC would move first, with a first record date of November 1 and first payment on November 2. The other three finish the quarter on the old schedule, paying for the last time on December 31 before switching on January 1.
STRC currently has 24 record dates a year; all four would move to 365. For the three paying quarterly, president and chief executive Phong Le put the increase at 90 times.
Frequency kills volatility
"The way that you create low volatility and high liquidity is to shorten the duration of the instrument and to actively manage the credit," Saylor said, adding that, "the higher the frequency of those adjustments, the lower the volatility of the instrument." The lower the volatility, he added, "the easier it is to get in and get out."
When STRC paid monthly, its price fell about 49 basis points on the day before the dividend, Le said. After June's move to semi-monthly, that narrowed to roughly 36 basis points.
Strategy also expects steadier month-end marks for fund managers, a home for institutions' idle cash, faster reinvestment, possible entry into low-volatility indices, and better haircuts when the shares are pledged as collateral.
Le called it "the first global security in the world with calendar day accruals and dividends." If approved, the four would be the only securities anywhere paying on 365-day calendar accruals, among five globally with daily dividends and a combined $15 billion market value. "Digital credit, digital capital, is meant to work every single day," he said.
Shareholders backed the last change comfortably, with 97.5% of STRC holders and 99.9% of common shareholders approving semi-monthly payments in June, Le said, adding that Strategy has paid $255 million in STRC dividends since.
What to Watch
AI outlook — possibilities, not facts
Shareholder vote on dividend proposal
Very likely · Within weeks
Open Questions
- Will shareholders approve the proposal on October 28?
- How will the market react to the change in dividend frequency?
