Bitcoin reserve strategy pioneer MicroStrategy again purchased 6,220 BTC, now holding a total of 607,770 bitcoins. Additionally, the strategy announced a new issuance of preferred stock STRC, with a floating interest rate and monthly dividends, initially issuing 5,000 shares of preferred stock to be used for general corporate purposes, including acquiring bitcoins and for operating capital.
(Can Bitcoin concept stocks also provide stable dividends every quarter? A comprehensive analysis of MicroStrategy's three preferred stocks)
STRC preferred stock pays dividends monthly, with a dividend rate of up to 9%
STRC stock will accumulate dividends at a floating interest rate based on a par value of $100, starting from August 31. The initial dividend yield is 9% annualized. The initial public offering will issue 5,000 shares of preferred stock, under the following conditions:
Payment method: Cash payment
Dividend frequency: Paid monthly at the end of each month
Dividend rate: Floating interest rate, the first month is 9%, dividends will start from the end of August
Redemption price: The company has the right to redeem at any time, the redemption price is $101 + unpaid interest
STRC's redemption priority is higher than STRD, STRK, and MSTR, but lower than convertible bonds and STRF
What is the benchmark for STRC's floating interest rate?
STRC adopts a floating interest rate, with an initial dividend yield of 9% annualized, which will adjust with the SOFR (the benchmark interest rate published daily by the New York Federal Reserve). If the SOFR rate decreases, the dividend rate will also decrease. MicroStrategy likely anticipates that the Federal Reserve will initiate a rate-cutting cycle in the future, hence adopting this method to reduce interest burdens.
STRC targets the short-term credit market
STRC pays interest monthly, and has a floating interest rate aimed at short-duration products, targeting the short-term credit market, such as money market funds, short-term treasury bills, commercial paper, etc., with a market size of up to $33 trillion. However, compared to other products, STRC has an interest rate of 9.5%~10%, significantly higher than the 4.2% of money market funds and 4.3% of short-term treasury bills.
Paying $400 million in dividends per year, Saylor: I can pay for over 180 years!
Saylor listed the current convertible bonds and preferred stocks of the strategy and pointed out that the company will gradually phase out convertible bonds in the future, while MicroStrategy will pay over $400 million in interest for these debts each year.
However, Saylor is not worried about the heavy interest burden brought by preferred stocks; he stated that the current market value of bitcoins held by MicroStrategy, after deducting debts (convertible bonds), is sufficient for the company to pay interest for 180 years. And to take a step back, even if bitcoins drop by 75% to below $30,000, MicroStrategy can still handle 26 years of dividends.
This article discusses MicroStrategy's reissuance of high-dividend preferred stock STRC, with the first month's dividend at 9%. Saylor: I can pay for 180 years. First appeared in Chain News ABMedia.
