Preferred stock

SEC is the US Securities and Exchange Commission. The SEC describes the usual dividend and liquidation priority of preferred over common shares. Liquidation winds up a company and settles its assets and obligations. The name does not establish priority over creditors or every other preferred series. Check issuer, class and actual rights. Preferred is not one standard package. Limited ordinary voting also does not exclude special protective consents, for example when class rights are changed. Look for those in the documents. The issuer is the company issuing the shares. A class or series groups shares with the same specified rights. [1]

USD means US dollars. STRD, STRF and STRK are trading symbols for different preferred shares of Strategy, a company that buys and holds bitcoin. Our own example pays an annual dividend of 8% on a base of 100 USD, giving 8 USD if actually paid. Buying at 80 USD gives current dividend yield of 8/80 = 10%; buying at 120 gives about 6.67%. Neither includes price changes. STRD documentation distinguishes stated amount, a contractual calculation amount, from adjustable liquidation preference, the claim used for liquidation payments. These are not the market price or legal par value. Our dividend example is not STRD’s actual rate. [3]

Declaring a dividend means the company’s authorized governing body has approved the payment. A rate written into the terms does not replace that decision. Under terms published on 21 March 2025, STRF accumulates dividends, but payment depends on declaration and legally available funds. Our simple model of 8 USD a year and two unpaid years leaves arrears of 16 USD, without modelling further increases. Arrears are not cash in an account or a general right to demand the whole investment back at any time. The series determines penalties, further accumulation and restrictions on other payments. A simple model does not replace its actual formula. [2]

STRD’s terms of 6 June 2025 make regular dividends non-cumulative: an undeclared period does not carry forward as a future claim. Our example pays 2 USD quarterly. Two skipped periods therefore create no automatic 4 USD catch-up; the next declared 2 need not become 6. This differs from a dividend already declared but not yet paid. First establish which event a report describes. [3]

Our simplified liquidation example has assets of 150 USD and higher-ranking debt of 100. The sole preferred class has aggregate preference of 100, but receives at most 50 from what remains; common shares receive nothing. Other costs and classes are ignored. Priority over common stock does not create assets. A preference of 100 also does not guarantee a trading or repurchase price of 100. Claim rank, assets available for distribution and market price are different questions. [4]

Perpetual means the series has no ordinary fixed date for returning invested funds. A call, the company’s redemption right, may depend on its decision and contractual events; it is not automatically an investor right to exit whenever desired at a set amount. In our model you buy at 120 USD, receive a dividend of 8 after a year and 100 on a permitted redemption. The result is (8+100−120)/120 = −10%. A positive dividend did not prevent an overall loss. Do not transfer redemption terms from one series to another. [3]

Strategy’s disclosure as of 30 June 2026 gives STRK an initial conversion ratio of 0.1 MSTR per share, so 10×0.1 = 1. MSTR is the company’s common stock. STRD has no conversion feature. This is a dated example, not a feature of all preferred shares. Conversion changes the claim and may add common shares. Separately read ratio adjustments, whether dividends use cash or shares, and special voting rights. The preferred label alone answers none of these questions. [5]

Net BPS means net Bitcoin Per Share: bitcoin per share after deducting specified senior claims under the chosen method. The following model only converts the value of claims into bitcoin units; it does not automatically pay out any bitcoin. In our model, the company holds 100 BTC and has 100000 common shares outstanding. A new nonconvertible preferred issue raises 1000000 USD. After costs of 20000, the company buys 19.6 BTC at 50000 USD per bitcoin. Gross holdings per common share are 119.6/100000 = 0.001196 BTC. But if the issue adds a senior claim of 1000000 USD, it equals 20 BTC in this simplified snapshot, leaving 99.6 BTC. Total holdings do not tell the whole story. This is neither the company’s Net BPS definition nor a right to withdraw bitcoin. In SEC EDGAR, the public US regulatory filings database, check actual priority and contracts. The stated costs cover all fees in this model; the claim is valued at the same bitcoin price used for the purchase. [6] [7]