Analysts at US-based financial services company TD Cowen explained that STRC preferred stock dividend changes planned by Strategy company could benefit both the company’s common stock holders and stakeholders such as Strive, which is heavily weighted towards Bitcoin treasury. Founded in 1989, TD Cowen is known as a well-established financial institution that provides research and analysis for institutional investors.
STRC dividend model change
Strategy has proposed increasing dividend payments on STRC preferred stock from once a month to twice a month. The company management argues that with this change, the reinvestment of resources will accelerate, liquidity in the market will increase and price stability will be supported. In two consecutive notes, analysts Lance Vitanza and Jonnathan Navarrete described STRC as “an instrument that offers a more stable price and creates an advantage for liquidity and investor interest.” STRC also stands out as an additional financing source for Strategy to expand its Bitcoin portfolio.
The analyst report included the following statements:
“From the perspective of common shareholders, Strategy is creating the first self-funded, unlimited-maturity preferred stock instrument in the public markets. This model allows the company to continue accumulating Bitcoin without relying too heavily on traditional financing.”
Voting on STRC amendments will continue until June 8. If approved, dividends will be paid twice a month starting July 15.
On the other hand, TD Cowen lowered its price target on Strategy’s common stock (MSTR) to $350 earlier this month; but on Monday it increased again to $385. MSTR stock is trading at around $168 and is down more than 44 percent in the last 6 months.
Strive and market effects
In an additional analysis released Tuesday, TD Cowen noted that changes to the STRC model will have direct and indirect positive impacts on Strive. It was stated that Strive’s net asset value (NAV) premium may increase as Bitcoin inflows increase. Additionally, flexibility in capital use with the new model could increase Strive’s Bitcoin returns.
Strive has also taken similar steps in its strategy. The company, which pays a 12.75 percent dividend on its preferred shares called SATA, built this model on STRC and used it in both Bitcoin and $ 50 million STRC purchases.
According to analysts, the feedback mechanism created with the launch of STRC encourages more Bitcoin purchases, while also indicating that investor interest and capital access may increase in companies that follow a similar treasury model.
TD Cowen announced a $26 target price with a “buy” recommendation on Strive (NASDAQ: ASST) earlier this month and reiterated that view on Tuesday. ASST stock is trading at $15.70 today and has gained over 50 percent in the last 30 days.
