Michael Saylor has a pitch for anyone who thinks holding Bitcoin and paying dividends are mutually exclusive: sell a tiny sliver of your stack, use the proceeds to pay investors, then buy back way more than you sold.

In a television appearance on June 5, Strategy Inc.’s executive chairman walked through the mechanics of how the company’s preferred stock instrument, called STRC (“Stretch”), lets Strategy fund regular dividend payments while actually growing its Bitcoin position.

The 1.4% solution

STRC is a perpetual preferred stock that pays an 11.5% annualized dividend, distributed monthly. It represents just 1.4% of Strategy’s total assets.

Between May 26 and May 31, Strategy sold 32 BTC for approximately $2.5 million to finance the STRC distributions. That sale marked the company’s first Bitcoin disposal since 2022.

For every Bitcoin sold to cover dividends, Strategy expects to acquire between 10 and 20 BTC through capital raises and other operational efforts. The conservative scenario Saylor outlined requires Bitcoin to appreciate by just 2.3% annually for the model to sustain dividend payouts indefinitely. Earlier discussions from Strategy in 2026 pegged the threshold even lower, at roughly 2.05% annual Bitcoin growth needed to fund all preferred stock dividends without issuing new shares.

Why sell Bitcoin to buy more Bitcoin

Saylor’s emphasis throughout the appearance was on a metric he’s championed for years: Bitcoin per share. The goal is to maximize how much Bitcoin each share of MSTR effectively represents. If selling 32 BTC enables the company to acquire 320 to 640 BTC through subsequent raises, the per-share Bitcoin exposure actually increases even though some coins left the treasury.

What this means for investors and the broader market

The 11.5% annualized yield on STRC is eye-catching in any interest rate environment. For income-focused investors who want Bitcoin exposure without directly holding the asset, a preferred stock tied to a Bitcoin treasury is a genuinely novel product.

The 10-to-20 BTC replacement ratio Saylor cited isn’t guaranteed; it depends on market conditions and investor appetite for Strategy’s various offerings. Preferred shareholders also sit below senior debt holders in the capital structure if things go sideways.

The first Bitcoin sale since 2022 is symbolically significant even if the amount, 32 BTC, is trivially small relative to Strategy’s total holdings. It signals that the company is willing to be pragmatic about its stack when the math supports it.