STRC versus STRF: how the income structures differ

STRC and STRF are preferred shares issued by Strategy. Their differences begin with the dividend rate and their priority within the company's capital structure. Both expose investors to Strategy's financial condition. Neither gives its holder direct ownership of specific Bitcoin or a lien over the company's Bitcoin.

01Compare the legal structures

Strategy's STRC information (opens in a new tab), STRF information (opens in a new tab) and filed investor briefing (opens in a new tab) describe these structures. The governing documents and subsequent amendments control.

02Variable and fixed rates create different exposures

STRC's rate can change. Strategy evaluates it monthly as part of an approach intended to encourage trading near its $100 stated amount. That is a management objective, not a guaranteed price or a holder's right to withdraw $100. Strategy says a price below the target does not automatically require a rate increase. See its dividend-policy explanation (opens in a new tab).

STRF's regular annual dividend is $10 per $100 stated amount. Its fixed rate does not fix the share price. A change in the income investors demand, or in their assessment of Strategy, can change the price they are willing to pay.

Payment frequency and the annual dividend rate are separate features. Check the current declared record and payment dates; a more frequent schedule does not by itself increase the annual amount.

03Dividend rate is different from current yield

The stated dividend rate uses the security's stated amount as its reference. Current yield compares an annualised dividend amount with the market price paid.

For a hypothetical preferred share paying $10 annually, buying at $80 produces a 12.5% current yield: $10 ÷ $80. Buying at $125 produces an 8% current yield. These are arithmetic examples, not current STRC or STRF quotes.

Current yield excludes gains or losses on the shares, taxes, transaction costs and changes to future payments. It is not a promised total return or yield to a guaranteed repayment date.

04Understand cumulative dividends and priority

Cumulative means unpaid regular dividends accumulate according to the security's terms. It does not guarantee timely payment or eventual recovery. Cash payments remain subject to board declaration, applicable legal restrictions and the company's financial capacity.

Within the same Strategy issuer, STRF ranks ahead of STRC for the relevant dividend and liquidation preferences. Both remain equity below creditors. Obligations at subsidiaries can also affect what reaches the parent company. Review the STRF prospectus annex (opens in a new tab) with subsequent amendments for the detailed rights and exceptions.

05Evaluate income alongside capital risk

Neither instrument is a bank deposit, an insured cash balance or a bond with a scheduled repayment date. The issuer states that its preferred shares are not collateralised by its Bitcoin. Perpetual status and specific redemption provisions should be considered together.

Before comparing headline yields, examine the latest terms, liquidity, senior claims, dividend coverage and the price paid. A larger quoted yield can accompany greater risk of capital loss. The useful comparison is the complete income structure and its risks.