This is twice as good as $STRC

0:00STRC is the perpetual preferred variable rate dividend paying stock that MSTR issues. And right now it pays 11.5% dividend annually and it pays it out monthly. It's an incredibly attractive product. It's an incredibly interesting one. Any amount of shares that are issued above the $100 share price goes towards buying Bitcoin by MSTR which increases their collateral base and will outperform the dividends that they're paying. That's sort of the thesis that MSTR is playing by. And there's much more about that as well. And I have a lot of previous videos explaining what exactly STRC is, any potential risks, downsides, possible future scenarios and all of that. That's not what this video is. This video is explaining a strategy called dividend clipping between STRC and a similar product issued by the company asset called SATA or SATA. So we have stretch and SATA.

1:01What's interesting about them is that you can play between them and actually get a higher dividend rate annually holding both of them for different periods of time. I'm going to explain this strategy. I actually built out an entire calculator on my website showing and modeling different simulations and scenarios for this strategy. What could go wrong and all of that. We're going to get into it in this video and it's incredibly interesting. It brings up the annualized dividend yield significantly into the 20 mark by doing this strategy. Of course, there's additional risks, there's additional management, but I'll show you and talk about everything. My name is Forest Hodel. I'm a Bitcoin educator and I do one-on-one coaching for anybody looking to up their Bitcoin best practices with security, inheritance, running a node, running a miner, whatever you need help with. I am your Bitcoin tech support. You can reach out to me through my website path to bitcoin.xyz, which is linked in the description.

2:01And I also have a link for my online learning community called the Bitcoin Masters, where you can meet a bunch of great Bitcoiners and get access to my two exclusive courses, Bitcoin basics and beyond, and how to use Bitcoin privately. Check those out. So this is my website here. This is an open source tool that I developed on my website pleb tools. And there's all sorts of really cool stuff on here. I've made a couple of videos talking about this before, but this is one that I just recently made with this strategy. So this strategy relies on the fact that STRC, the X dividend date, which is the date that you have to hold the stock for to receive the dividend payment in the future, is in the middle of the month. And the X dividend date of SATA is at the end of the month. So you have roughly, we'll just call it for ease, a 15 day in between, where you could sell one stock by the other and receive dividends of both of them within the same month period.

3:02This is holding, getting the dividend from one, selling that stock, buying the other one, and getting the dividend from the other one. Because these two stocks are intentionally geared to be priced at the $100 share price, this is a unique scenario where if that was true, if that was accurate that they both were $100, you could buy into one at $100, get the dividend, sell out at $100, receive the dividend, sell in. Now, that's where it becomes a little bit interesting, but I actually did some calculations on the average drop, and that's gonna be incredibly, incredibly important. So let's take a look at how this calculator's built. We'll model some scenarios and see how effective this is. So if we bought STRC at the $100 share price, we would have this at par, which is 0% difference. We can lower this down to 10%, so we could say we bought this at a discount, that's going to affect these ratios at the end, which shows our profit ability.

4:02If you rotate out of STRC, and this is something that happens, which is after a dividend is paid, there will be other people just having held the stock for the dividend will sell after they receive the rights to the dividend, and that will lower the value of the stock trading on the market. So what I calculated here was that an average of actually holding the stock 15 days out from the X dividend date. And what happens, so again, this is just gonna be average, it would actually be a little bit less than that, because you need time to rotate into the other one, but I just did a 15 day average, and so what's interesting here, is that the rate of the previous closes, the average percentage between the X dividend date close and the 15 day away close, averaged out to be 0.1% positive.

5:06So that's stable. Then it wasn't at $100 each time, it was actually less than that on all of these, but some of them were up 15 days after the X dividend date, some of them were down, and it actually added up to be exactly even. I did the same thing for SATA, and it's negative 0.6%. So I'm gonna use those averages right now. So what we're doing is we're actually going to be selling at a 0.1% premium, so this will allow us to calculate that by saying that we bought it at $99.9, and we sold it at the $100. So that's a difference of 0.1% positive. Now we're gonna do the opposite here. We're going to sell at a 0.6% loss for SATA. So this portfolio is based off of $100,000. This is something you could change here. All of these are adjustable, all of these are changeable, and then you get different results. So with $100,000 portfolio, the proceeds after rotation,

6:07so this is the capital base that you have, minus, this doesn't include any of the dividends that you're receiving, and you're receiving these monthly. So one month of doing this, at the averages of holding it for each for 15 days after the ex-dividend date, and then rotating between them, your proceeds would be about $500 less, $500 and 50 cents, but you will have gained $2,022 and 86 cents that month in dividends. So with the monthly income that we received, combined with the total amount of assets we have, even with this $500 loss, our actual proceeds plus the month's income is positive. So we have $1,522 positive after this little loss here. So annually, this equates to $123,773.

7:08And this is the monthly dividends. So you do lose a little bit because you're not buying and selling completely at par. That could change, that's one variable that could change positively or negatively, right? But this is just based on averages. So the annual yield you would get on STRC is 11.5, and the annual yield you would get on SATA is 12.75, and swapping between them, you're losing a little bit on average, currently based on past, and this gives you an annual yield of 24.27% doing this strategy. Now these numbers are not exact, but their historical numbers anyway, so it doesn't necessarily matter because it's not going to be exact into the future anyway, because it's just based on past performance. So this gives you an estimate of how you could outperform with something like this. Now what are some risks, right? Because that sounds really good, right? That's obviously 24%.

8:10Sounds amazing. You could auto set this up, so it's not 15 days. You give yourself a little bit of grace period, but you could auto sell. You could have a reoccurring buy afterwards, so you could just have it automatically sort of operate for you, and you could get a pretty high yield by clipping these coupons. Now what's interesting is these, I know SDRC is I'm assuming SATA is as well, these are return of capital payments, so it's sort of tax deferred, and I'm no tax professional, but my understanding of this is that because you're receiving the dividends and selling the stock, you are reducing your adjusted cost base, and therefore there will be a tax implication for that. Would that be qualified dividends or capital dividends? Not 100% sure, you would have to check with your jurisdiction, but this is obviously a more complex option for people anyway, so it's going to bring an additional complexity.

9:11Now the other thing here that should be mentioned is the markets and the variable rate of these instruments is what pushes them to par, but that isn't a guarantee if the market, all of a sudden really hated these instruments for some reason, they would go well below the $100 par, and all of a sudden your strategy would not be worth doing anymore because the dividend that they would pay wouldn't be equivalent to the amount that you've lost by rotating. So there could be either potential months where rotation doesn't necessarily make financial sense, or the entire system could break if these instruments stop performing at these averages that we've seen with a 15-day buffer, bringing the value back close to what it was at the ex-dividend day. So if we looked at that, we actually just brought these all back to 100. If you either put Seta down, say you bought it at 100, but now you're rotating out of it and it's at 80,

10:13so that's a 20% cut there, then your proceeds here are 80,000, and your annual is significantly beaten down. This is the 4.25% that you're earning now because you took a massive loss on that position, and then if STRC as well stopped performing well, went down 10%, you had to sell out of that. Now, you have less money. So you not only didn't beat inflation, but you have less money. Now, the problem here with my calculator, there's a couple of things, this is just simply vibe-coded stuff, but it's open source, so if anybody wants to fix it, the annual yield here is technically still true, but your position is down regardless because the principal, the value of the equities themselves have gone down, but you are still earning the monthly income that they are paying you back.

11:13This would begin to erode the capital base, though, and make it so that you actually have less shares over time as well. But with this strategy, if things go as they have with the averages that I've pointed out, if they continue paying what they pay, that's another risk is that these are variable rates. If there's so much demand for these products that they can't handle that amount of demand, their option is to lower the yield, and that would actually have be less attractive to investors, so there'd be less demand. That's typically not what happened, or not what has happened. These rates have actually continued to go up on these products as they find a market fit, and as they attract the investors that are arbitraging the difference and pushing it to that $100 share price. But it's a possibility, right? So we've got to look at possibilities, we've got to look at risks with doing something. Another thing that could be considered here is putting this kind of yield and the portfolio idea into a compound annual growth calculator,

12:14which there is one right here called calculator on pleb tools. And if you were to compound and continue to buy more with the monthly dividends, and then continue to rotate that capital. And I mean, 24% annually compounded could be pretty insane, actually. So I see some risks here. A lot of the risks are the risks just, they're all the risks with STRC, and all the risks with STAT, which are third party risks. They are preferred equity risk. There's all these risks of what these companies, MSTR and asset will do with these products. Will they suspend the dividends? I mean, you go look at other information about I'm not going to get too much into it. It's unlikely that those kind of risks will happen to these products. But again, you got to know all your risks if you're going to be confident in a position or a strategy. So I just thought this was a fun experiment.

13:15And I was really surprised by the results, not of the 24% because I figured you would get yield from both of them, if you're going to be buying both for the ex dividend rate. But at what average these are at 15 days after their ex dividend date, the ability to recover on average is crazy. These are both very close to 0% change. STRC at positive 0.1%, the 15 days after the ex dividend date and SATA at negative 0.6, that is so close, that is such little volatility actually in those time frames historically. And I think actually that volatility will go down as these become more popular. And the at-par rate will be more stable in that sense in the market volatility. Now, there's still the how long-term viable is this? Do these companies have the capital base to pay this out? And they're buying Bitcoin with the capital they raise

14:17from this will Bitcoin out appreciate the dividends that they're paying? Will they be forced to lower dividends on these? Because of the capital being too expensive and Bitcoin's performance not being well good enough? Again, all risks you should consider, all things you should think about. This has just been a fun experiment for educational and entertainment reasons only. If you guys want to try these scenarios out, map them out yourself, check out the link in the description to my pleb tools website. And if you're a coder, I'd love to see you contribute anything to it. It's just an open source fun project. I mean, my friends mess around on. And of course, if you need some help with Bitcoin things, Bitcoin security, all that. Book a session with me, a one-on-one, check out the online learning community, the Bitcoin masters. And there's a link to everything else you need as a Bitcoin or a Bitcoin wallet, Bitcoin node, privacy phones, stamp seed kits, Bitcoin miners, everything you need with discount links in the description.

15:18Thanks everybody for watching.