Michael Saylor Just Revealed How Strategy Can Pay Dividends ‘Forever’

Michael Saylor told investors that Strategy Inc can sustain dividend payments indefinitely as long as Bitcoin appreciates by just 1.25% annually. During the company's Q4 2025 earnings call, the Executive Chairman defended the Bitcoin treasury strategy despite reporting a $12.4 billion net loss and a 17.12% stock price drop in aftermarket trading.

The company's Bitcoin holdings fell below their cumulative cost basis for the first time since 2023 as the cryptocurrency plunged to $63,596.56 on February 6, 2026. This represented a 13% decline in a 24-hour period, marking Bitcoin's worst single-day performance since the June 2022 crash.

How Can Strategy Pay Dividends With Just 1.25% Bitcoin Growth?

Strategy's dividend sustainability model relies on minimal Bitcoin price appreciation. CEO Phong Le explained that the company holds a Bitcoin reserve of approximately $45 billion (down from $60 billion the previous week) and faces annual dividend obligations of $888 million across its preferred equity instruments.

With 67 years of dividend coverage from the Bitcoin reserve alone, the company needs Bitcoin to increase by only 1.5% annually to maintain payments by selling incremental holdings. Saylor went further, stating that even if Bitcoin stopped appreciating entirely, Strategy would have "80 years to figure out what to do about that."

The company established a $2.25 billion USD cash reserve in Q4 2025, providing 30 months of dividend coverage without touching Bitcoin holdings. CFO Andrew Kang noted this reserve was built specifically to address market concerns about dividend reliability during volatile periods.

What Were Strategy's Q4 2025 Financial Results?

Strategy reported substantial losses driven by mark-to-market accounting for Bitcoin holdings:

• Net loss: $12.6 billion for Q4 2025
• Operating loss: $17.4 billion for Q4 2025
• Earnings per share: -$42.93 (versus forecast of $2.97)
• Unrealized fair value loss on digital assets: $17.4 billion

The company's software business showed operational strength:

• Revenue: $123 million (exceeding forecast by 3.53%)
• Subscription services revenue: $51.8 million (up 62.1% year-over-year)
• Cloud revenue: increased 65% year-over-year
• Total annual revenue: $477 million

Bitcoin Holdings And Accumulation Strategy

As of February 1, 2026, Strategy held 713,502 Bitcoin with a total acquisition cost of $54.26 billion, representing an average purchase price of $76,052 per Bitcoin. This amount equals approximately 3.4% of all Bitcoin that will ever exist, maintaining the company's position as the world's largest corporate Bitcoin holder.

The company achieved a 22.8% BTC yield for 2025, beating the lower end of its 22% to 26% target range. This metric measures the percentage increase in Bitcoin per share, demonstrating the company's ability to acquire Bitcoin faster than shareholder dilution.

Understanding Strategy's Leverage And Risk Profile

During the earnings call, executives addressed investor concerns about the company's debt structure. With $8.2 billion in convertible debt and net debt of $6 billion after accounting for cash reserves, Strategy operates at approximately 13% leverage based on current Bitcoin prices.

Phong Le compared this leverage ratio to broader market benchmarks:

• AAA-rated investment-grade companies: 23% leverage
• BBB-rated high-yield companies: 32% leverage
• Technology sector average: 15.7% leverage

Strategy's leverage sits at half the level of investment-grade companies and one-third of high-yield companies. The convertible debt carries an average interest rate of just 42 basis points and is staggered between 2027 and 2032 with no restrictive covenants.

Extreme Downside Scenarios

Le addressed the question of how low Bitcoin could fall before impacting debt repayment. According to company calculations, Bitcoin would need to decline 90% to approximately $8,000 per coin before the Bitcoin reserve equals net debt obligations. At that point, the company would need to restructure debt, issue additional equity, or explore other financing options over the five-year period until debt maturities.

What Is Strategy's Stretch (STRC) Digital Credit Product?

Stretch represents Strategy's flagship digital credit instrument, designed to offer Bitcoin exposure with reduced volatility. The preferred stock currently trades near its $100 stated amount and pays an 11.25% annualized dividend rate (18% on a tax-equivalent basis).

Key Stretch characteristics include:

• Current size: $3.4 billion in aggregate stated amount
• Volatility: 7% (compared to Bitcoin's 45% volatility)
• Liquidity: $118 million average daily trading volume (versus $1 million for typical U.S. preferreds)
• Collateralization: 5.6x over-collateralized after senior instruments
• Tax treatment: Return of capital distributions expected for 10+ years

The company updated its dividend adjustment framework to use monthly volume-weighted average price (VWAP) instead of the previous five-day period. This change addresses trading patterns around record dates and payment dates.

Seven-Year Bitcoin Per Share Targets

Strategy outlined three scenarios for doubling Bitcoin per share over seven years through digital credit issuance:

Conservative scenario (5% annual BTC yield):

• 10% digital credit sales ($6 billion)
• 10% dividend rate
• 1.4x Bitcoin per share increase

Mid-case scenario (10% annual BTC yield):

• 16% digital credit sales ($10 billion)
• 9% dividend rate
• 2x Bitcoin per share increase

Aggressive scenario (14% annual BTC yield):

• 20% digital credit sales
• 8% dividend rate
• 2.5x Bitcoin per share increase

How Did The Market React To Strategy's Earnings?

Strategy's stock price closed at $119.74 in aftermarket trading on February 6, 2026, down 17.12% following the earnings announcement. The decline reflected investor concern over the substantial earnings miss, which showed a negative surprise of 1,545.45% compared to analyst expectations.

Bitcoin's simultaneous price decline intensified selling pressure. The cryptocurrency fell below $65,000 during Thursday trading, erasing gains accumulated during the early months of the Trump administration and pushing Strategy's holdings below their cost basis.

Michael Saylor appeared undaunted during the conference call, emphasizing that the company's Bitcoin treasury strategy was built to withstand volatility. He noted that Bitcoin's 45% drawdown from its all-time high four months earlier was consistent with the asset's 45% volatility profile.

What Are The Company's Capital Raising Capabilities?

Strategy raised $25.3 billion in capital during 2025, making it the largest equity issuer among U.S. public companies for the second consecutive year. The company represented 8% of total U.S. equity issuance, including 6% of common equity markets and 33% of preferred equity markets.

The capital structure includes five listed preferred equity securities launched in 2025 through separate IPOs. Major banking partners include Morgan Stanley, Barclays, Moelis, TD, Benchmark, and Clear Street, providing distribution to wealth management, retail, and institutional investors.

In January 2026 alone, despite challenging market conditions, Strategy raised an additional $3.9 billion and acquired 41,002 Bitcoin. The company reportedly maintains substantial remaining capacity across its at-the-market programs for future capital raises.

 

Conclusion

Strategy's Q4 2025 results reflect mark-to-market accounting losses rather than operational failure. The company maintains 713,502 Bitcoin, holds $2.25 billion in cash reserves, and operates with 13% leverage while convertible debt carries a 42 basis point average interest rate. With dividend obligations of $888 million annually and a Bitcoin reserve providing 67 years of coverage, the treasury model functions as designed. Strategy continues executing its capital-raising strategy, having added $3.9 billion in January 2026 despite market volatility, and targets doubling Bitcoin per share over the next seven years through its Stretch digital credit platform.

Resources

1. Michael Sylor’s post on X: Strategy earnings call

2. Press release by Strategy Inc.: Strategy Announces Fourth Quarter 2025 Financial Results; Holds 713,502 BTC

3. Report by CoinDesk: Strategy has $6.5 billion loss on BTC, but continues trading at premium to value of its assets

4. Report by WSJ: Bitcoin Booster’s $12 Billion Loss Headlines Crypto’s Worst Day Since 2022 Crash