Let’s just call a spade a spade. STRC is the hot product from Strategy, Michael Saylor’s company, which is currently paying an 11.5% dividend based on a fairy tale.
The premise when the product was launched last year was that Bitcoin would appreciate by 30% CAGR over the next 20 years, and of that 30%, Saylor would use his Bitcoin purchases to smooth out volatility, allocating approximately 10% to pay dividends on the preferred shares—including STRC—and the remaining 20% would go toward increasing the value of the common stock.
This is total BS for one very simple reason: with the buying strategy Strategy has executed—which has consisted of buying heavily when the price skyrocketed and little or nothing when it fell—the return on those purchases is much lower than the asset’s return. Currently, Bitcoin’s cumulative return over the past 5 years is 16%, which is just a 3% CAGR (far from what Saylor is predicting) while Strategy has a negative return on its Bitcoin purchases of 12%.
The numbers are just too shocking, which is why I've started a separate thread.
Saylor can keep paying that dividend as long as there are people who buy whatever he issues without thinking much. Do you know how it can pay dividends? From new investors who buy more STRC or MSTR. In other words, he needs new buyers of STRC to pay the dividends to those who already own the stock. Does that sound familiar to you?
You can see an example of his usual salesman BS that people swallow without thinking much
here, where he makes a shoddy comparison of STRC with assets that aren't comparable.
