How To Make An 11.5% Yield That’s 100% Tax-Free With Michael Saylor’s “STRC…”

Hey … A lot of you have been asking me about Michael Saylor's new preferred stock (STRC) that's paying out 11.5% per year…

STRC, (aka "Stretch"), is issued by Strategy, (formerly MicroStrategy), the largest corporate Bitcoin holder on the planet…

And I get why people are skeptical or have some questions…

11.5% is more than you’d expect to make in a year investing in the S&P 500, and there’s no significant price swings to worry about like your typical stocks…

In a world where your savings account pays a fraction of that and 10-year Treasuries are hovering around 4% sounds too good to be true, so let’s break down how it works in plain English...

Here's What “STRC” Actually Is...

STRC is a perpetual preferred stock with a $100 par value.

Perpetual means there's no maturity date. You buy a share at ~$100. You collect a dividend of ~$0.96 per share. That works out to 11.5% per year at the current rate…

The dividend is variable and gets adjusted each month to keep the share price pinned near $100, so you're not supposed to worry about price swings…

And as of last week, STRC announced that they’re now paying out dividends every 2 weeks instead of monthly which is even more appealing…

Since it launched in July 2025, STRC has done exactly that… It's traded in a tight 2.1% range around par for the last two months and about $6.4 billion of it has already been bought up…

And by the way, the monthly dividends are currently being treated as a non-taxable return of capital for U.S. federal income tax purposes... So that 11.5% per year is 100% tax-free…

So How Is Saylor Paying Out 11.5%?...

This is the part most people get wrong…

STRC isn't backed by cash flow from a software business. Strategy takes the money it raises from selling STRC... And uses it to buy more Bitcoin.

Here's what the critics don't get...

For the 11.5% dividend to sustain itself indefinitely, Bitcoin only needs to appreciate about 2% per year on average.

That's it. Two percent. And that’s not 2% “each year”, that’s just 2% on average over the course of years…

Bitcoin has historically averaged well over 30% per year since inception, even when you include it’s bear markets…

So Saylor is paying 11.5% using an asset that's outperformed that hurdle by more than 10X over any meaningful time horizon, and it’s turning the financial markets upside down…

Is It Safe?

STRC is designed to trade at a stable $100 per share, but it's not “safe” the way a Treasury bond is safe...

STRC has zero contractual obligation to trade at $100… That’s a target, not a guarantee and it’s deviated from that price twice so far…

• In November 2025 it fell to $90.52 and stayed below $100 for roughly 6 weeks…

• And in February 2026 it fell to $93.10

Both times, Saylor hiked the dividend to pull it back. When it drops, they raise the rate to attract buyers.

STRC holds up as long as three things stay true...

1: Bitcoin doesn't enter a multi-year bear market with no recovery... (Highly unlikely)

2: Strategy keeps finding buyers for new STRC shares...

3: And the dividend stays at or near 11.5%…

The critics primary argument is that if Bitcoin crashes, the whole thing collapses…

And while that’s technically true, that's true of any asset tied to anything...

As of right now STRC has enough cash to continue paying dividends for years even if Bitcoin drops significantly.

This Isn’t Some Kind Of Crypto Scheme...

Before Strategy could sell a single share of STRC to the public, the entire offering had to be registered with the SEC.

They filed a shelf registration, (Form S-3, which became effective on January 27, 2025), disclosed every risk factor in writing, and the SEC reviewed the filing before it could go live.

Morgan Stanley, Barclays, TD Securities, and Moelis were the joint book-runners on the offering…

Now... SEC registration doesn't mean the investment is safe. The SEC explicitly doesn't approve or disapprove of any security. What it means is the disclosure has been reviewed, the risks are on the record, and this isn't some off-shore scheme running out of a Discord channel.

You're buying a fully registered U.S. security, issued by a Nasdaq-listed company with a multi-billion dollar market cap…

Here's What I Think...

STRC isn't a savings account. Don't put your emergency funds in it.

But if you believe Bitcoin will appreciate more than 2% per year over the long haul, (which I do), STRC is one of the most interesting yield instruments I've seen in the last 20 years…

And I think it’s going to explode in popularity when this bull run in stocks comes to an end… When people get scared and want to go to cash, their single best option to put that cash with the highest yields will be STRC.

And all of that money will allow Saylor to buy even more Bitcoin and even lower prices, expanding their balance sheet for more STRC shares…

Just do your own homework and know what you're buying… You're trusting Saylor and your trusting Bitcoin, and it might be worth throwing a bit of money into to test the waters… (Not financial advice).

Sincerely,

Mike Dillard ✞
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