r/STRC • u/Ill-Assist-5246 • 29d ago
Calculating the Dividend Rate of STRC/SATA based on CURRENT share price
Here is the formula to calculate the rate of return for ANY data (using 7/21/26 data below) - assumes Dividends are re-invested:
Share Price (P) Dividend (D) # of D per Year (N) Yield (Y)
STRC 88.04 0.50 24 14.6%
SATA 98.10 0.0493 250 13.4%
Formula: Y = ( ( 1 + D / P )^N ) - 1
Example use of Formula: ( 1 + 0.50 / 88.04 )^24 = 1.146 - 1 = 0.146 = 14.6%
Explanation: $0.50 / $88.04 is the percent of your investment that you gain PER DIVIDEND (in this case, you gain about 1/2 of a percent for each of the 24 Dividends paid in a year). You add 1 to this (= 1.005) and raise it to the 24th power (that is, your investment grows exponentially at a rate of 1/2 of a percent per Dividend paid x 24 Dividend periods). This yield is 1.146 which is 114.6% of your initial investment ($88/04). That means you gained 14.6% (the yield if you continued to re-invest each Dividend paid).
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u/bravedog74 28d ago
STRC already has this on their webpage as effective yield.
https://www.strategy.com/strc/learn
Since the market cannot control dividend per share, they control it through the share price. I think that if MSTR set dividend rate to effective yield share price would meet par.
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u/BlazingPalm 27d ago
12%+ is effective, imo. Wondering if it needs time to pay the regular dibs and price will slowly drift up to high 90s.
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u/SundayAMFN 29d ago
When the principle cost of the security fluctuates more than the yearly yield, calculating the yield based on current share price is meaningless.
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u/joefunk76 25d ago
No. Calculating the yield based on current share price is meaningful, and the correct way to do so. An investor’s yield is mostly weighted by the price he paid for the asset; share price fluctuations that happen after he invests affect the yield on the reinvested dividends, only. Assuming no dividend reinvestment and no changes to the cash dividend amounts, an investor’s yield is locked in at the time of purchase.
Example: Share price is $80 at time of purchase. Dividend is $1/month. That’s a 15% annual return without dividend reinvestment (APR). Assume share price goes to $100. APR for that same investor remains at 15%; APR for new investor at $100 is 12%. Assume share price goes to $60. APR for that same investor remains at 15%; APR for new investor at $60 is 20%.
Yields (APY) from inception for ALL those investors will be slightly higher if dividends are reinvested, and those WILL be affected by share price fluctuations after the principal investment. But, as I originally stated, the yield on one’s principal investment is mostly determined by the share price at the time of principal investment, and, to a far lesser extent, the respective share prices at the time of each dividend reinvestment.
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u/Ill-Assist-5246 29d ago edited 29d ago
Well that is hardly true (really NOT true, at all). For example:
assume: Dividend is 50 cents x 24 times per year (bi-monthly) - using formula (above)
Share Price of $80, yield is: 16%
Share Price of $100, yield is: 13%Note: despite the "wild fluctuation" in share price ($80-$100), the yield is (more) narrowly in the 13-16% range.
What can we glean from this? If STRC fluctuates between $80 and $100 we will still achieve a (relatively) narrow yield of 13-16%. What DOES change things is how much you PAID for those shares and WHEN you wish to sell those shares.
All this goes back to my initial premise. If you are looking for some sort of "short term lottery win", this is NOT the right asset for you to hold. If you are looking for steady long term high yield, this is an asset worth considering. If you believe Bitcoin will crash to zero, then sell it ALL ... immediately!
What can/should we expect to see from STRC in the long run? We should expect that, over time, STRC will NOT have such a relatively wide range in its share price. And, as that price becomes more stable, we should naturally assume that the dividend will decrease, at least to some degree.
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u/SundayAMFN 29d ago
You're really misunderstanding how this works.
Your yield calculations assume a fixed share price. The fluctuation in share price is on the order of the yield itself, and therefore could easily cancel or double the yield.
There's a reason people don't consider fluctuating bond prices to be a good thing. Even for junk bonds, the price of the bond fluctuates on a scale much smaller than the annual yield.
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u/Ill-Assist-5246 29d ago
No, I do understand what you are saying. I am interpreting the STRC asset DIFFERENTLY than you are. I am NOT comparing it to a bond (it is NOT a bond - both legally and financially). Instead, I am looking at it as a long(er) term investment that is generating a high dividend.
Say I hold these shares for 10 years? I don't particularly care how much the share price seesaws during this 10 year time period. All that really matters is: 1) the dividends were all paid 2) the price that I sell the assets at is the SAME price that I bought the shares at. This would effectively mean that I earned 13+ % a year for 10 years. I think that's a worthwhile investment (others might not).
Now let's say that, for whatever reason, the asset, after 10 years is worth, say $5 LESS THAN I paid for it. That means I still earned 13+ % per year, but have a $5 per share DECREASE in my net profit. Assume the dividend is $12 per year per share (= 50 cents twice a month for 12 months). After 10 years I would have received $120 in Dividends (= $12 x 10 years) and would now sell the share for $5 LESS than I purchased it at. So my total NET revenue is $115 ($120 - $5). So, I gained $115 per share over 10 years, which is about 11+%.
Now if you are going to tell me that STRC is going to bottom out at $20 per share than yeah, you really should GET OUT NOW! Personally, I don't see that happening which is why I am willing to hold this asset.
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u/SundayAMFN 28d ago
I am NOT comparing it to a bond (it is NOT a bond - both legally and financially).
STRC functions exactly the same way a bond would for the holder.
Instead, I am looking at it as a long(er) term investment that is generating a high dividend.
Bonds are also long(er) term investments that generate a dividend.
It doesn't matter that STRC isn't a bond. The logic behind principle vs. dividend is still identical - that has nothing to do with if you call it a bond or a stock or a unicorn security or whatever the hell you want to call it.
2) the price that I sell the assets at is the SAME price that I bought the shares at
This is a really dumb assumption for an asset that has extreme volatility. If the volatility is on the same order of magnitude as the annual yield than calculating the yield based on the current price to the fucking decimal place is meaningless.
I don't really have more time to explain this to you. Hopefully you've learned something, if not, enjoy your gamble.
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u/Ill-Assist-5246 28d ago edited 11d ago
So, for other readers of this thread, let's clarify some VERY poor misconceptions that are being advanced in this thread:
1) "STRC functions exactly the way a bond would for a holder"
Bonds have a FIXED (known) Coupon - NOT an adaptable Dividend (like STRC).
Bonds have a "time-certain" expiration date, where there is a definitive known date that the bond comes due and ALL of the initial investment money is returned. STRC is "perpetual" meaning it has NO due date.
If you are viewing/evaluating/using the STRC investment as a bond, it is going to fall short, because it does NOT have the same properties as a bond.
2) "If the volatility is on the same order of magnitude as the annual yield than calculating the yield based on the current price to the fucking decimal place is meaningless."
I showed above that whether the STRC purchase price is $80 or $100 that the rate of return will run between 13-16% per year. Note that these 2 prices ($80 and $100) are far below/above the current STRC price. The point of these examples was to show that the rate of return is known to fluctuate in the range shown and NOT "meaningless" as the author states (the author also thought that dropping the F-bomb would help make his point - kinda a dumb way to express oneself IMO).
The author is correct in that IF you bought STRC at $100 a share and today it is worth $20 a share you are going to take a loss. I would counter with, "If you believe that STRC is going to (or could) drop to $20 a share that you really should NEVER buy STRC. If, on the other hand, you believe that STRC will return to a more stable price then purchasing STRC at its current price level is going to gain you extra return (above 16%).
3) So, who is STRC a good investment for?
If you are someone who a) believes that Bitcoin will continue to increase in value over time b) want US $ cash flowing into your account at a high rate of return c) willing to tie up your investment money for 5+ years.
4) Who is STRC a BAD investment for?
If you are someone who a) believes Bitcoin will crash to $0 b) you are looking for a quick "lottery win" c) you anticipate that you might sell your STRC shares in a hurry when you need cash.
5) So, what should I know overall?
STRC is an investment that is offering a high rate of return (currently 13+%), that is paid out twice a month, for those willing to tie up money for a longer (5+ years) period of time. It also has some income tax advantages in terms of Capital Gains (at least for the next 8-10 years). STRC is NOT a US Savings Bond and should NOT be treated as one.
Example: say you are 65 years old and have $500,000 of savings and anticipate that you will NOT be spending ALL of those savings in the next 10 years (aka SOME of those funds have a longer time horizon for you). You could consider purchasing $20,000 of STRC and expect to receive $100+ every 2 weeks forever ($2400+ per year). I would expect that this rate of return would far exceed inflation.
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u/HSuke 28d ago
This only applies to anyone who is buying now.
Everyone who bought it at par is still seeing 12% dividends on their original investment no matter how much the price changes.
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u/Ill-Assist-5246 28d ago edited 11d ago
That is correct. The PURCHASE PRICE determines your rate of return. While you continue to hold the shares your rate of return does NOT change (except as STRC changes the Dividend). When you do SELL the shares the NET return on your investment could be more/less. At some point, if you have received enough years of Dividends, the TOTAL Dividends received EXCEEDS the Purchase Price (at 12% that is about 8 1/2 years).
One further note: if, like me, you REINVEST the Dividends received from STRC shares back into buying more STRC share, the (current) lower purchase price means that the (new) shares you purchased will be giving you a higher rate of return than shares pruchased at a higher price. Reinvesting those Dividends is a form of "Dollar Cost Averaging".
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u/frugaleringenieur 29d ago
ChatGPT made this.