Strategy’s 12% Yield Meets Bitcoin’s 19% Drop and Cash Test

By Tom Whitfield

Strategy Inc.’s STRC preferred shares carried a variable 12% annual dividend rate on Nov. 12, while bitcoin traded near $70,900 and stood 18.93% lower year to date, according to market data cited by Bitcoin.com. The divergence tested the appreciation assumptions underpinning Strategy’s preferred-stock financing and dividend payments.

Economist Peter Schiff challenged those assumptions in a Nov. 12 post on X, arguing that recent losses undermined expectations of sustained appreciation. He wrote:

“The strategy behind STRC is that because the bitcoin MSTR owns will appreciate by 30% per year, MSTR can afford to pay STRC shareholders a 12% annual yield and still make money. But last year bitcoin lost 6.5%. So far this year it’s losing 17%. There’s no basis to assume 30%.”

MSTR identifies Strategy’s common stock, while STRC refers to separate income-paying preferred shares. That distinction matters because STRC holders hold a claim on the issuer rather than the bitcoin listed by the company.

What return assumptions support the 12% payout?

Strategy founder and executive chairman Michael Saylor projected average annual bitcoin appreciation of approximately 30% over 20 years in a June 2025 CNBC interview. In an Oct. 13 Bloomberg interview, he projected annual growth of 20% to 30% over the next two decades; both statements set long-term appreciation assumptions.

At the publication’s market snapshot, bitcoin had fallen 3.74% over 24 hours, 6.53% over seven days, and 14.52% over one month. It also traded 30.10% below its level one year earlier, extending the 17% year-to-date loss Schiff cited.

How does STRC calculate its dividend?

Strategy’s variable STRC dividend rate stood at 12% annually, based on a $100 stated amount per share and the reference value for dividend calculations. That rate produces $12 in annual payments on the stated amount, while an investor’s effective yield depends on the purchase price paid.

Management evaluates the rate monthly and seeks to support trading around $100. Shareholders approved daily STRC dividend accrual in October, with accruals beginning Nov. 1; weekend and holiday accruals continue, and related payments process on business days.

The change accelerates recognition of earned dividends without raising the 12% annualized rate. It alters payment timing rather than the amount due for a full year.

Can bitcoin appreciation fund the payments?

Strategy outlined its bitcoin-income framework on Nov. 7, combining bitcoin holdings with preferred shares, securities issuance and corporate cash management. Appreciation can lift the carrying value of those holdings, but unrealized gains do not automatically become dollars available for dividends.

Payments require corporate cash from financing or asset sales. Investors in STRC own a claim against Strategy, whereas direct bitcoin holders own the cryptocurrency itself, exposing the two positions to different cash-flow and asset-value outcomes.

How are dividends and buybacks funded?

Strategy’s third-quarter financial results disclosed approximately $431.8 million in bitcoin sales during 2026 to fund part of its preferred dividends and STRC repurchases. The report also listed $5.07 billion in dollar assets as of Oct. 25, which Strategy said covered about 3.4 years of dividend and interest obligations.

STRC buybacks involve purchasing shares from investors, reducing the number carrying future dividend claims. The sales-and-buyback structure links capital-market issuance, preferred-share funding and bitcoin inventory to the company’s ability to maintain distributions.

What changed during Nov. 2-8?

Strategy’s Nov. 2-8 activity included $81.9 million for 1,036 BTC and $188.3 million for preferred-share buybacks. Both purchases were financed through common-stock sales.

The company’s holdings reached 850,364 BTC, acquired for $64.16 billion. As of Nov. 8, its designated dollar reserve for preferred dividends and debt interest totaled $4.77 billion, alongside $146.2 million in separate cash.

What risks did Charles Schwab identify?

Charles Schwab identified earnings volatility and potential liquidity pressure in its assessment of bitcoin treasury risks. Liquidity pressure means difficulty meeting cash obligations when cryptocurrency holdings lose value. Under market-value accounting, changes in those holdings can produce unrealized gains or losses in reported earnings.

That accounting distinction separates a marked-up asset from cash available for payments. Strategy’s reserve and financing program addresses operating calls, but falling holdings values would tighten the cash available for distributions and buybacks.

The next monthly STRC rate review and the next business-day dividend cycle will provide the clearest near-term test of whether Strategy can preserve its 12% annualized payout while bitcoin volatility, financing costs and buyback demands shape cash requirements.