Compounding unpaid dividends

On a cumulative preferred, an unpaid dividend becomes an amount owed to holders. Compounding terms go a step further: the unpaid amount itself earns a dividend from the missed payment date until it is paid. Some series also raise that rate each period to make deferral increasingly expensive for the issuer.

How it applies to Strategy's series

• STRC: unpaid regular dividends accumulate "compounded dividends" at the regular rate for the period, compounded on each subsequent payment date (8-K, 29 July 2025). Strategy's August 2026 briefing says each unpaid instalment compounds semi-monthly, matching STRC's semi-monthly payment schedule since 30 June 2026 (FWP, 24 August 2026).
• STRE: unpaid amounts compound quarterly at 10% plus 100bp, stepping up 100bp per period to a maximum of 18% (8-K, 13 November 2025).
• STRF: a similar step-up structure, starting at the regular rate plus 100bp (8-K, 25 March 2025). 21DC has not yet confirmed the cap from the certificate itself.
• STRD: non-cumulative, so nothing accrues or compounds.

How it applies to Strive's series

• SATA: unpaid amounts compound monthly at the regular rate plus 25bp, rising 25bp a month to a maximum of 20% (424B5, 7 November 2025).
• SATS: the 8-K summary says dividends are cumulative but that nothing accrues on unpaid regular dividends. The liquidation clause, however, mentions "compounded dividends". Readers should check the certificate itself (8-K, 20 October 2026).

Why it matters

Compounding and step-ups do not stop an issuer from deferring. They raise the cost of deferring, and they increase the amount added to the liquidation preference claim if the issuer is wound up.

What to check in the filing

• The compounding rate and frequency
• Any step-up, and its cap
• Whether compounding stops once arrears are cleared