Strategy Inc. (NASDAQ:MSTR) co-founder Michael Saylor said on Tuesday that Bitcoin’s (CRYPTO: BTC) capital gains can theoretically cover dividends on its preferred stock “indefinitely” if the asset grows at over 3.3% annually.
Saylor’s Argument
Saylor posted a chart on X showing 31 years of dividend coverage of Perpetual Stretch Preferred Stock (NASDAQ:STRC) at a 0% annualized rate of return.
He then pegged the breakeven at 3.3%, meaning that any long-term growth in Bitcoin above 3.3% would produce capital gains sufficient to fund the dividends infinitely.
Strategy introduced the STRC preferred stock last year to provide a high-yield, lower-volatility income instrument. The proceeds are used to acquire more Bitcoin. It currently pays a 12% annual dividend, which is paid semi-monthly in cash and adjusted periodically to encourage the stock to trade close to its $100 par value.
The Counter Argument
Longtime Bitcoin critic Peter Schiff, meanwhile, rejected Saylor’s logic, stating it assumes “dividend obligations won’t over time,” an outcome he maintains is inevitable.
Cryptocurrency analyst Ali Martinez questioned the reliability of using BTC gains for consistent dividend payments, noting several years in which Bitcoin posted negative annual returns.
The New ‘Strategy’
Strategy has also announced a Bitcoin monetization program that lets the company sell its BTC to raise up to $1.25 billion for cash reserves, pay preferred dividends and interest on debt, and support repurchases of preferred and common stock.
Last week, it offloaded 3,588 BTC for roughly $216 million to fund the dividends
The move has shaken investor sentiment, while critics have accused it of pivoting from being Bitcoin’s largest corporate buyer to selling the asset to fund its operations.
Price Action: At the time of writing, BTC was exchanging hands at $62,975.15, down 0.47% over the last 24 hours, according to data from Benzinga Pro.
Strategy shares were down 3.96% in Wednesday’s pre-market trading after closing 3.38% lower at $97.36 during Tuesday’s regular trading session.
Benzinga’s Edge Stock Rankings indicate that MSTR has underperformed with a weaker price trend across short-, medium-, and long-term timeframes.
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