There's a Bitcoin company that's now offering investors a 15% annual dividend, paid in small installments every business day.
While a 15% dividend is high enough to grab everyone's attention, the more revealing number is what buyers agreed to pay for it.
On Oct. 15, Strive priced seven million shares of its new SATS preferred stock at $90 apiece, despite each share carrying a $100 stated amount and a $15 annual dividend. That puts the implied cash yield at 16.7% for someone buying at the offering price.
The upsized offering is expected to raise $630 million before expenses, with settlement scheduled for Oct. 20. Strive will use the proceeds to acquire Bitcoin, support its business, buy income-generating assets, or repurchase other shares.
The eye-popping yield makes the product easy to advertise and sell. However, it doesn't tell us what an investor bought for $90, or what that investment would be worth if they needed their money back.
A $100 claim is not a $100 exit
SATS is preferred stock, which means its owners are in a different position from shareholders who buy Strive's ordinary stock.
Common shareholders receive whatever value remains after the company satisfies its liabilities and more senior claims. Preferred holders receive contractual payment rights and a higher place in the repayment order, but their upside is generally more limited.
Strive's prospectus sets an initial liquidation preference of $100 per SATS share, subject to adjustments that can't reduce it below $100.
That preference determines the claim investors can assert under the relevant liquidation provisions, and it doesn't mean a holder can demand $100 whenever they want to sell.
The market price depends on what another buyer is willing to pay for the dividend stream and its associated risk. That's the most important difference by far, particularly because SATS is perpetual. There's no maturity date when the company must return the investor's original purchase price.
So, a share bought at $90 could trade at $100 or more if buyers get comfortable with the company's finances and accept a lower yield. It could also fall to $75, even if Strive continues making every scheduled payment.
The calculation is straightforward:
Purchase price | Annual dividend if paid in full | Current cash yield
$75 | $15 | 20.00%
$90 — announced offering price | $15 | 16.67%
$100 | $15 | 15.00%
$110 | $15 | 13.64%
Illustrative yields calculated from the $15 annual dividend. Market prices other than the $90 offering price are hypothetical. Cash yield excludes price changes, fees, and taxes.
Someone who pays $90, collects $15 over a year, and sells for $75 receives $90 in total before costs. If every dividend were paid on time, the investor would still have made nothing.
If the resale price falls further, the payments might not even cover the capital loss. If it increases, the buyer can earn more than the advertised income. That's why the advertised 15% is just a contractual dividend rate.
Strive's preferred shareholders still stand in line
The word preferred might sound like a promise of safety, but its value depends on who stands above and below the investor in practice.
SATS ranks ahead of Strive's common shares for dividends and liquidation distributions, but behind all of its existing SATA preferred stock. Debt and certain obligations at subsidiaries also take priority, while the company retains the ability to issue additional securities with equal or higher ranking.
Consider a simplified company with $200 available after other liabilities, $100 owed to senior preferred shareholders, and $50 owed to junior preferred holders. The remaining $50 belongs to common shareholders, so a $40 decline in available assets would hit common shareholders first.
Another $30 decline would wipe out the remaining common value and leave the junior preferred holders $20 short, but the senior preferred claim would still be covered.
That's the protection junior preferred owners are buying: common equity can absorb some losses before they do. But that protection thins as senior claims grow or the company's asset value falls. For Bitcoin treasury companies, both can happen at once.
Strive can raise money by issuing more securities and use the proceeds to buy additional Bitcoin. That way, its holdings rise, but so do the financial claims attached to the business. A growing Bitcoin balance doesn't automatically mean every shareholder's position has improved equally.
Strive's October Bitcoin purchases lifted gross Bitcoin per effective common share by just 1.72%, despite a much larger increase in its total holdings.
SATS buyers are exposed to the same basic tension: the company can grow while the protection underneath an individual claim changes.
There are additional rights in the SATS terms, including a holder repurchase right following a defined fundamental change, generally at the $100 stated amount plus accumulated unpaid dividends. Strive also has limited redemption rights under specified conditions.
These provisions aren't substitutes for an everyday right to sell at $100. In normal trading, the exit price is whatever the market provides.
Daily dividends still need a source of cash
SATS dividends are scheduled to begin on Nov. 9 and be payable every business day.
At seven million shares, the $15 rate implies $105 million in annual SATS dividends. Strive intends to establish a reserve of $22.50 per share at closing, or $157.5 million total, representing 18 months of scheduled dividends.
The reserve will provide an initial payment buffer, but it won't turn Bitcoin into an interest-paying asset or establish that the company can fund the same payments indefinitely. Strive's prospectus anticipates using further capital raising as a primary source of dividend funding beyond the initial reserve period.
Income promises accumulate even though the underlying asset doesn't produce a cash return.
SATS buyers are essentially relying on Strive to maintain enough liquidity to make payments, enough asset value to support their claim, and enough market confidence to preserve a reasonable resale price.
Strive isn't the only company using preferred securities to finance corporate Bitcoin exposure, since Strategy has also built a substantial preferred-share business of its own. Keeping these securities attractive can become an ongoing capital-allocation task.
Preferred dividends can be funded in a lot of different ways, including through cash reserves, new financing, investment income, or asset sales. Each choice significantly changes the company's position: issuing more claims creates future obligations, while selling assets reduces holdings the business might otherwise retain.
Bitcoin appreciation can increase the balance sheet's value. But that appreciation can't turn into cash in the corporate bank account until a transaction converts it into spendable funds.
A perpetual preferred share from a Bitcoin treasury company is a legitimate investment, since some investors prefer a defined income claim over common equity.
The offering's $90 price is the most important aspect covered here, because it puts a real cost on that choice. It means that investors are demanding the equivalent of 16.7% a year if payments continue in full.
That unusually high indicated cash yield shouldn't be mistaken for free income, though. That's the compensation investors are offered for risks related to payment capacity, claim priority, duration, and resale value.
That's why the most important comparison we can make here isn't between SATS and Bitcoin, but between the dollars a buyer pays today, the dollars Strive can distribute over time, and the dollars another investor will eventually pay to take over that claim.
While Bitcoin drives appreciation in Strive's underlying business, the company itself delivers the dividend promise. The market now decides what that promise is worth.
