STRC: High Yield from Hard Assets

STRC

STRC (Stretch) is Strategy’s flagship preferred equity within its evolving capital structure, designed as a tax-advantaged, short-duration, high-yield security that channels investor demand for income into incremental BTC accumulation. Its defining feature is a variable, monthly-adjusted dividend (currently ~11.5%), which Strategy actively manages to anchor the security near its $100 par value. Price stability is further reinforced through an at-the-market issuance (ATM) program, which caps upside near par, and a callable feature at $101, limiting sustained premium trading. This structure effectively creates a quasi-stable, yield-focused instrument that balances investor income demand with Strategy’s objective of scalable capital formation. Furthermore, STRC dividends are classified as Return of Capital (ROC), meaning tax isn’t paid when received. Instead, the cost basis is reduced, and if the shares are held for over one year, gains are taxed at long-term capital gains rates (US holders).

Strategy has effectively created a yield-bearing stable instrument backed by BTC. If the price drops below par, the dividend rate will increase to encourage price appreciation back to $100. If the price rises above par, Strategy simply sells new shares via the ATM into the open market (which is used to purchase more BTC). This new supply absorbs buying pressure and pins the price back down. Below we show STRC’s price since inception and the associated dividend rates.

STRC’s annualized vol has been mostly low except for 1) the November spike — a macro contagion event (S&P 500 broke its 50-day moving average for the first time in ~6 months, and the VIX surged 50% to the highest since Trump's Liberation Day tariffs in April 2025) — and 2) BTC crashed into the $62K range (the lowest BTC price yet for the cycle).