STRD: Strategy's Non-Cumulative Preferred Stock

Important Disclosures

This profile has been prepared by True North Research, a media and research subsidiary of Strive, Inc. (“Strive”). It summarizes certain publicly available information and internal analysis relating to Strategy’s non-cumulative preferred stock (“STRD”) and its capital structure. It is part of a broader “Digital Credit” educational initiative and is provided for informational and educational purposes only.

This content is non-independent and should not be relied upon as a complete or current description of STRD, Strategy, or any offering. It does not constitute an offer to sell or a solicitation of an offer to buy any security, nor does it constitute investment, legal, accounting, or tax advice. It does not take into account the objectives, financial situation, or needs of any particular investor. Investors should make their own independent evaluation and consult their own advisers.

Any offer or sale of securities will be made only through the applicable offering documents and SEC filings, including those available on SEC EDGAR.

Because True North is a Strive subsidiary, Strive and its personnel may have economic interests in Digital Credit instruments discussed. This creates actual and potential conflicts of interest that readers should carefully consider.

Instrument Overview

STRD is Strategy’s (Nasdaq: MSTR) non-cumulative perpetual preferred stock.

It is the only non-cumulative instrument within the Digital Credit category, meaning dividend payments are not required and are not recoverable if not declared.

Strategy priced STRD on June 5, 2025 at $85 per share, listing it on the Nasdaq Global Select Market with a $100 stated value and a 10.00% fixed quarterly dividend. Dividends are payable only “when, as, and if declared” by the board and are explicitly not mandatory.

As of March 16, 2026, STRD traded at $75.79 — approximately a 24% discount to par — producing an effective yield of 13.19% based on current inputs. Notional outstanding is approximately $1.402 billion across ~14.0 million shares.

In simple terms, STRD is a high-yield preferred instrument where income depends entirely on ongoing dividend declarations. Unlike cumulative preferreds, missed payments do not accrue or compound and are permanently forfeited.

(Sources: Strategy pricing release, June 6, 2025; Strategy 8-K, June 10, 2025; Strategy.com STRD page.)

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Key Terms

(Sources: Strategy 8-K, June 10, 2025; Strategy pricing release, June 6, 2025.)

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Rate History — Structural Differences

STRD has carried a fixed 10.00% stated rate since issuance, with no resets or step-up provisions.

This apparent simplicity can be misleading when compared to other instruments with the same stated rate but different contractual protections.

For example, instruments with cumulative structures convert missed dividends into future obligations. STRD does not. Identical stated rates across instruments do not imply equivalent income characteristics or protections.

(Sources: Strategy offering documents.)

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How It Works in Practice

Dividend mechanics. Dividends are declared at the discretion of Strategy’s board. Payments occur only if declared and are not contractually required.

Strategy’s February 28, 2026 declaration confirmed a $2.50 per-share dividend for Q1 2026. This reflects current board decisions and does not create a forward obligation.

Non-cumulative structure. If a dividend is not declared, the unpaid amount does not accrue, compound, or become payable in the future.

At a $100 stated value and 10.00% annual rate, the quarterly dividend is $2.50 per share. Missed periods reduce realized income without creating any future claim on the issuer.

Comparative context. In cumulative preferred structures, missed dividends become obligations that must be satisfied before junior distributions. STRD does not include this feature, which results in materially different outcomes in stress scenarios.

Tax treatment. Strategy reported that 100% of 2025 distributions qualified as nontaxable return of capital for U.S. federal income tax purposes. Tax characterization is determined annually and may differ from expectations. Preliminary classifications should not be treated as guarantees.

(Sources: Strategy press release, February 2, 2026; Strategy Q4 2025 earnings.)

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Capital Structure Position

Strategy’s capital structure ranks:

Debt → STRF → STRC → STRE → STRK → STRD → Common (MSTR)

STRD is the junior-most preferred instrument, positioned directly above common equity.

All other preferred series have priority over STRD for both dividends and liquidation. In periods of financial constraint, issuers may prioritize payments on instruments with cumulative features or stronger contractual protections.

STRD does not provide holders with a mechanism to recover missed dividends and does not include escalating penalty structures tied to non-payment.

Strategy’s filings also permit additional preferred issuance, which could further affect relative positioning within the capital structure.

(Sources: Strategy filings and offering documents.)

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Who This Instrument May Suit

STRD has characteristics that may be relevant to investors who:

• Seek higher current yield relative to other preferred instruments
• Are comfortable with discretionary dividend structures
• Can tolerate variability in income outcomes
• Are evaluating total return under different market scenarios

STRD may be less aligned with the objectives of investors who:

• Require predictable or contractual income streams
• Prefer cumulative dividend protections
• Prioritize seniority within the capital structure
• Are not comfortable with higher sensitivity to issuer decisions

These observations are general and do not constitute a recommendation. Each investor must determine suitability based on their own circumstances.

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Key Risks Specific to STRD

Non-cumulative dividend risk. The defining feature of STRD is that unpaid dividends are permanently forfeited. This creates the possibility of reduced or zero income during periods when dividends are not declared.

Junior-most subordination. STRD sits at the bottom of the preferred stack. In scenarios involving financial stress or capital allocation decisions, more senior instruments may be prioritized.

Issuer discretion. Dividend payments depend entirely on board decisions and available resources. There is no contractual requirement to declare dividends in any given period.

Relative valuation risk. STRD may trade at a discount to par due to its structural features, including lack of cumulative protection and junior positioning. This discount may persist or widen depending on market conditions and risk perceptions.

Market sensitivity. STRD’s valuation may reflect a combination of income expectations, issuer credit considerations, and broader market sentiment, including Bitcoin-related dynamics.

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Current Data Snapshot

(Refresh on publication day)

STRD’s higher effective yield reflects market pricing that may incorporate its junior positioning, non-cumulative structure, and variability in income outcomes.

Differences in pricing relative to other preferred instruments may reflect structural distinctions rather than inefficiencies.

→ Full instrument comparison: Markets & Instruments → Scenario analysis and stress testing: Risk Analysis → How we analyze: Methodology

This content is provided for informational and educational purposes only. It does not constitute an offer to sell or a solicitation to buy any security. Investors should review all relevant offering documents and SEC filings before making any investment decision.

True North is affiliated with Strive and is not an independent research provider. This creates potential conflicts of interest that should be considered when evaluating this content.