Strive’s SATS: How 15% Yield Becomes A Bitcoin Accretion Machine

Strive’s newly IPO’d SATS perpetual preferred stock introduces an interesting opportunity: the company could potentially issue preferred equity above its $100 stated amount and grow Net Bitcoin Per Share (Net BPS) in each issuance round, subject to risks and parameters described below. 

This article discusses how and why it works. The key question is whether SATS will trade above $100. Its unusually high 15% fixed dividend makes that outcome, and the subsequent accretion, plausible.

Why SATS could trade above par

SATS carries a fixed annual dividend of $15 per share, based on its $100 stated amount and its 15% number. It ranks junior to Strive’s SATA preferred stock, but its dividend structure offers investors two attractive features. 

First, SATS dividends are cumulative. Strive can defer payments, but any unpaid dividends accumulate as an obligation to preferred shareholders. 

Second, the $15 annual dividend is fixed. This differs from SATA, which currently pays an annualized $13 per share but uses a variable dividend rate. Therefore, SATA shareholders could receive less income in the future if Strive reduces that rate. SATS dividends accrue at a fixed $15 per share per year, but are payable only “when, as and if” declared by Strive’s board, and may be deferred.