How STRC's Dividend Rate Is Set: The VWAP Mechanism Explained

Seven straight monthly rate increases, 9% to 11.50% — and then nothing. STRC has sat at 11.50% since March 2026. When I first followed that sequence I assumed someone at Strategy was making a fresh judgement call each month. They aren't, really. STRC's rate is set by a published rulebook tied to a single number: its five-day average price measured against $100 par. Once you've seen the table behind it, the whole rate history stops looking like a string of decisions and starts looking like a thermostat — and that's the cleanest way I've found to understand the instrument.

What the prospectus said at IPO — and what it didn't

When STRC launched in July 2025, Strategy's 424B5 prospectus only described the rate mechanism in broad strokes: it intended to push the rate up when STRC traded below par and down when it traded above, aiming to keep the price near $100. No thresholds, no step sizes — at IPO this was a stated policy, not a rulebook. The numbers came later.

One detail set the tone from day one. STRC carries a $100 par value, but the IPO priced at $90 — so anyone buying at launch earned an effective yield near 10% on cost even though the stated rate was 9% of par. Trading 10% below par from the first print, the rate was always going to come under early pressure to climb. And climb it did, once the formal framework landed two months later.

The rulebook: the August 2025 framework

On 28 August 2025, Strategy filed an 8-K that turned the vague policy into hard numbers. This is the filing that first set out the exact price bands and the basis-point moves that have governed every monthly rate decision since. It measures a five-day VWAP — the five trading days before the last trading day of each month — and maps the result to a recommendation for the next month's rate:

You'll often see this shortened to "STRC below $98 means a 0.50% rate increase." That's not quite right, and the difference matters. The $95–$98.99 band only triggers +25 bps; you need a price below $95 to force +50 bps. Both are minimums — the "or more" is doing real work, because it's what lets the board go bigger when it wants to. The September 2025 jump from 9% to 10% — a full 100 bps in one month — was exactly that discretion in action, used to drag a freshly-launched instrument back up off the floor.

Strategy refiled the same four-band table in an 8-K on 5 February 2026. Nothing changed — same thresholds, same increments — so the rules that have governed every rate move since September 2025 are still the ones in force today. Worth knowing, because it means the framework you read once is the framework you can keep using.

The floors that actually bind

The VWAP table is management's stated intention, and Strategy has been clear it can change or suspend it at the board's discretion. What it can't rewrite at will is the Certificate of Designations — the binding legal terms — and that document is where the real protection sits. On the downside it locks in three things:

• Strategy can't cut the rate by more than 25 bps in a period, plus a small allowance if one-month term SOFR fell during it.
• Strategy can't cut below the prevailing one-month term SOFR rate — a floating floor that tracks short-term interest rates.
• Strategy can't cut at all until every accrued, unpaid dividend has been settled in full.

That's an asymmetric ratchet, and it's the part I'd point any income investor to first. There's no ceiling on increases — the rate can jump by any amount, any time — but cuts are boxed in: 25 bps at a time, never below SOFR, and only with a clean payment record behind them. Halving the rate would take the better part of a year. You don't get a guarantee, but you do get a mechanism that can't turn against you overnight.

The rate history

Seven increases in a row from September 2025 through March 2026 tell the story of an instrument stuck below par while Bitcoin slid and buyers stayed away above $95–$99:

• Aug 2025: 9.00% — first dividend at the IPO rate ($0.750/share)
• Sept 2025: 10.00% — +100 bps; the discretionary jump off deep below-par trading ($0.833/share)
• Oct 2025: 10.25% — +25 bps ($0.854/share)
• Nov 2025: 10.50% — +25 bps ($0.875/share)
• Dec 2025: 10.75% — +25 bps ($0.896/share)
• Jan 2026: 11.00% — +25 bps ($0.917/share)
• Feb 2026: 11.25% — +25 bps ($0.938/share)
• Mar 2026: 11.50% — +25 bps ($0.958/share)
• Apr 2026 onward: 11.50% — held; VWAP sitting in the $99–$101 neutral zone

The one outlier is that September jump — 100 bps, double the 50 bps minimum for sub-$95 trading. To me it reads as the board leaning hard on its discretion early, to steady an instrument that had opened well under its $100 par before it could drift any further.

Why it's held at 11.50% since March

Four months flat isn't inertia — under this framework it's a signal. A steady rate means the five-day VWAP has been landing in the $99–$101 neutral zone at each month-end. The earlier increases did their job: they pulled buyers in, nudged the price back towards $100, and once it settled the table called for no further change. This is the mechanism working exactly as designed — a self-correcting loop that uses the income rate to keep the price close to par. It's also why I read a STRC rate change, when one eventually comes, as information: it's telling you the price has drifted out of that band.

The semi-monthly proposal

Strategy has proposed switching STRC from monthly to semi-monthly payments, with a shareholder vote scheduled for 8 June 2026 — the outcome isn't confirmed yet. If it passes, holders would get two payments a month instead of one. The annual rate wouldn't change; only the frequency would. If you reinvest, slightly more frequent payments give a marginal compounding edge; if you take the income as cash, the yearly total is identical. It's a plumbing change, not a yield change.

Reading the filings yourself

If you want to verify any of this, it's all on EDGAR. Three filings carry the weight: the original 424B5 prospectus supplement (July 2025, with the Certificate of Designations and its rate-reduction limits), the 8-K of 28 August 2025 (which introduced the four-band VWAP table), and the 8-K of 5 February 2026 (which reaffirmed it). Strategy's full history is at SEC EDGAR — Strategy Inc (CIK 0001050446) — filter by 8-K for the framework filings, by 424B5 for the prospectus and any follow-on supplements.

SATA, over at Strive, sets its rate the opposite way — no published bands, no mandatory steps, just a board decision each month. I put the two mechanisms side by side in how SATA's rate is set.

I track STRC and SATA daily and hold positions in their parent issuers (MSTR and ASST). Reading STRC's rate as a thermostat rather than a monthly verdict is how I personally think about it — it isn't financial advice, and the SEC filings are the place to confirm the detail.

This article is for educational purposes only and does not constitute financial advice. Rate framework details are based on publicly available SEC filings as of June 2026. The dividend adjustment framework is management's stated intention and may be changed or suspended at any time. Always consult a qualified financial adviser before making investment decisions.