Strategy Inc., the company that transformed from enterprise software provider into the world's largest corporate holder of Bitcoin, made another statement about its financial architecture this week. The board approved an increase in the dividend rate on its STRC perpetual preferred stock to 11% annually, up from 10.75%—a modest bump that carries outsized implications for the company's treasury strategy.

The dividend of $0.916666667 per share will be payable on January 31, 2026, to stockholders of record as of January 15. Shares of Strategy rose approximately 3.5% on Friday following the announcement, as investors interpreted the increase as a signal of confidence in the company's ability to service its expanding capital structure.

The Bitcoin Treasury Model

Strategy's approach to corporate treasury management has been unorthodox, to say the least. Rather than holding cash and short-term bonds like virtually every other public company, Strategy has converted its balance sheet into a vehicle for Bitcoin exposure.

The numbers are staggering. As of the most recent disclosure, Strategy holds 672,497 Bitcoin, worth approximately $62 billion at current prices. This represents roughly 3.2% of all Bitcoin that will ever exist, making the company the single largest corporate owner of the cryptocurrency by a massive margin.

To accumulate this position, Strategy has employed every financing tool available:

  • Convertible bonds: Multiple issuances totaling billions of dollars, with conversion prices tied to stock performance
  • Common equity: At-the-market offerings that dilute existing shareholders but fund Bitcoin purchases
  • Perpetual preferred stock: The STRK and STRF series that pay fixed dividends without maturity dates

In 2025 alone, Strategy raised approximately $21 billion through these various channels, with the $2.5 billion perpetual preferred stock issuance described as the largest U.S. preferred stock IPO by gross proceeds that year.

Understanding the Preferred Stock Structure

The STRC preferred shares that received the dividend increase operate differently from common stock or convertible debt. Key features include:

  • Perpetual duration: There is no maturity date or mandatory redemption. Strategy pays dividends indefinitely unless it chooses to redeem the shares.
  • Variable rate: Unlike fixed-rate preferreds, STRC dividends adjust based on company decisions, giving Strategy flexibility in cash management.
  • Cumulative dividends: If Strategy ever skips a dividend payment, the amounts accumulate until paid. This protects preferred holders but creates senior obligations.
  • Priority over common: In any liquidation scenario, preferred shareholders receive their capital before common shareholders.

The 11% yield makes STRC among the highest-paying preferred stocks in the market, reflecting both the risk profile and the company's need to attract capital for continued Bitcoin purchases.

Why the Dividend Increase Matters

The 25-basis-point increase from 10.75% to 11% might seem trivial, but the signal matters more than the magnitude.

By raising rather than cutting dividends, Strategy's board communicates several things:

  • Cash flow confidence: The company believes it can service increasing dividend obligations from its software business operations and treasury management
  • Access to capital markets: Higher dividends attract investors, maintaining Strategy's ability to raise funds for Bitcoin purchases
  • Commitment to the strategy: The board is doubling down on the Bitcoin treasury model rather than hedging its bets

The market reaction—shares rising 3.5% on Friday—suggests investors approve of the approach, at least for now. But the strategy carries substantial risks that the dividend increase cannot eliminate.

The Risk Profile

Strategy's stock price is effectively leveraged Bitcoin exposure. When Bitcoin rises, Strategy shares typically outperform. When Bitcoin falls, Strategy shares typically decline more steeply due to the company's debt and preferred obligations.

The mathematics are unforgiving. Strategy must service approximately:

  • Preferred dividends: Hundreds of millions annually across multiple series
  • Convertible debt interest: Lower but still meaningful obligations
  • Operating expenses: The legacy software business still requires investment

If Bitcoin prices declined significantly and stayed depressed, Strategy would face difficult choices. It could sell Bitcoin to meet obligations—potentially at unfavorable prices—or attempt to raise additional capital in stressed markets.

The company's software business, while profitable, generates insufficient cash to cover its capital structure obligations. The entire edifice depends on Bitcoin appreciation or continued access to capital markets willing to fund additional Bitcoin purchases.

Bitcoin's Current Moment

The dividend increase comes at an interesting time for cryptocurrency markets. Bitcoin recently reclaimed the $93,000 level and bulls are targeting the psychologically significant $100,000 milestone. Institutional adoption continues expanding, with major banks now offering Bitcoin products to wealth management clients.

For Strategy, a continued Bitcoin rally solves many problems. Rising cryptocurrency prices increase the value of Treasury holdings, improve debt-to-equity ratios, and make equity and convertible offerings more attractive. The virtuous cycle that powered the company's ascent could continue.

But the reverse is equally true. Any sustained Bitcoin decline would strain the capital structure and potentially trigger a negative spiral of forced selling or dilutive equity issuance.

The Market's View

Strategy trades at substantial premiums to its net asset value—the market value of its Bitcoin holdings minus debt. This premium reflects several factors:

  • Liquidity: Investors can access Bitcoin exposure through regulated equity markets rather than cryptocurrency exchanges
  • Leverage: The company's capital structure provides implicit leverage to Bitcoin prices
  • Scarcity: Few public companies offer pure-play Bitcoin exposure at Strategy's scale
  • Execution: Management has successfully navigated multiple market cycles while growing the Bitcoin position

Critics argue the premium is unjustified, given that investors can now access spot Bitcoin ETFs that hold the cryptocurrency directly without the capital structure complexity and expense ratios that Strategy's dividend obligations imply.

Investment Implications

For investors considering Strategy, several factors merit consideration:

Bull case:

  • Bitcoin continues appreciating as institutional adoption expands
  • Strategy's scale and capital market access allow continued accumulation at favorable terms
  • First-mover advantage in corporate Bitcoin treasury creates lasting competitive moat
  • Dividend increases suggest management confidence in strategy sustainability

Bear case:

  • Bitcoin enters prolonged bear market, stressing capital structure
  • Preferred and convertible obligations consume disproportionate cash flow
  • Spot Bitcoin ETFs offer simpler, lower-cost exposure
  • Concentrated bet creates binary outcome risk

The Bottom Line

Strategy Inc.'s dividend increase is a small move with large implications. The company continues betting its corporate existence on Bitcoin's long-term appreciation, using every financial tool available to accumulate cryptocurrency. At 11%, the preferred stock yield reflects both the opportunity and the risk of this unconventional approach. For investors who share Strategy's conviction about Bitcoin, the dividend increase is reassuring. For skeptics, it's another reminder of how much is riding on a single asset.