Back in July, Overstock.com declared a stock dividend. While there’s nothing new about a company paying dividends, Overstock’s announcement was surprising for two reasons.
First, Overstock is one of the few large technology companies that actually pay a dividend.
Believe it or not, tech giants such as Alphabet (Google), Amazon, Biogen, and Facebook have plenty of free cash flow but prefer to hold on to their money instead of returning some to shareholders.
The other surprise was Overstock’s intent to pay shareholder dividends in a digital security listed on its affiliate company tZero’s trading platform.
Overview of Overstock
Reuters describes Overstock as an online retailer and incubator blockchain technology company. The firm operates three business segments:
- Online retail business similar to Amazon
- Retail business consisting of Direct and Partner segments
- Medici Ventures created to manage and oversee Overstock’s investments in firms building solutions leveraging and servicing blockchain technologies
Overstock markets its products and services online at Overstock.com, O.co, and O.biz. The company’s other offerings include Worldstock Fair Trade, Main Street Revolution, Farmers Market, and Supplier Oasis.
Digital preferred stock
Last month, Overstock filed an S-3 Registration Statement with the Securities and Exchange Commission for Series A-1 digital preferred stock. The filing is the first step in Overstock’s registration of the OSTKO dividend.
According to Overstock CEO Jonathan Johnson, “This dividend will be a great introduction for many to how blockchain technology can enhance the investor experience. We remain committed to issuing the OSTKO dividend and appreciate the cooperation and guidance we are receiving from regulatory authorities.”
Overstock declares digital dividends
Given Overstock’s interest in digital, it comes as no surprise that Overstock.com recently announced it would pay shareholders dividends in a digital security listed on its affiliate company tZero trading platform.
Around 40,000 shareholders own about 37 million shares of Overstock. The company will disburse one digital voting series A-1 preferred stock for every 10 shares of common stock, or 10 shares of voting series B preferred stock. Approximately 3.7 million digital dividend shares will be disbursed, including to shares held in an investor’s 401(k) or IRA.
Electronic Transaction Clearing will act as the clearinghouse and custodian, and Computershare as the transfer agent. Dividends will be transferred to an investor’s custodial digital wallet in mid-November, with shareholders signing up with tZero to receive their dividends.
According to Overstock, ““The bundle of legal rights represented by each of these new A-1 shares is similar to the bundle of legal rights embodied in shares of our common stock (OSTK) that trades on NASDAQ.”
Seven companies that understand Overstock’s value
Overstock’s e-commerce platform, cutting-edge technology and innovation solutions, and skilled executive team drive more than just the firm’s digital business. Overstock is also catching the eye of acquisition-minded competitors, according to Forbes.
Companies that could benefit from buying Overstock include:
- Berkshire Hathaway
- X5 Retail Group (the largest retail conglomerate in Russia)
Digital capital markets
Overstock views its implementation of digital preferred stock and dividends as a move toward a blockchain-based capital market.
According to Overstock’s founder Patrick M. Byrne, “Five years ago, we set out to create a parallel universe: a legal, blockchain-based capital market. We’ve succeeded.”