Special Dividends Are Heating Up the JSE This Winter 🥶💰

While temperatures drop this winter, several JSE-listed companies are turning up the heat with special dividend payouts. These once-off distributions - triggered by strong earnings, asset disposals, or surplus cash - offer investors a unique opportunity to pocket extra income beyond regular dividend schedules. From June through August, companies like Super Group, Tiger Brands, Omnia Holdings, Telkom and SAB Zenzele will be paying special dividends to shareholders.

These special distributions, often driven by exceptional earnings or major asset sales, provide an attractive incentive for investors seeking additional income.

What Are Special Dividends?

Special dividends are non-recurring distributions of company profits, separate from regular dividend cycles. They are not guaranteed and typically arise from extraordinary financial events, such as large disposals, surplus cash reserves, or strategic restructuring. Unlike ordinary dividends, which are paid consistently, often quarterly or annually, special dividends are irregular and frequently larger. They allow companies to return excess cash to shareholders without committing to a long-term increase in dividend obligations.

Several JSE-listed companies have recently declared special dividends:

• Telkom has reinstated its cash dividends for the first time in four years, declaring both an ordinary dividend (funded from available cash reserves) and a special dividend (paid from proceeds of the Swiftnet disposal). The dividend is expected to be paid in July.
• Tiger Brands announced both an interim ordinary dividend for the six months ended 31 March 2025 and a special dividend. This was made possible by improved cash flow, stronger working capital management, and proceeds from portfolio disposals. With its internal funding requirements met and its share repurchase programme concluded, Tiger Brands is now returning excess capital to shareholders under its capital allocation strategy. This dividend will be paid in July.
• Super Group declared a special dividend following the successful disposal of a non-core asset. The transaction is expected to reduce the Group’s gearing from 221% to approximately 24%, strengthening the balance sheet and reducing financial risk amid a high-interest-rate environment. Payment is scheduled for June.
• Omnia Holdings declared both an increased ordinary dividend and a special dividend, supported by strong earnings and healthy cash flows across its core businesses. The solid performance was driven by Mining, Agriculture RSA, and an improved Agriculture International segment. Management stated that the dual dividend reflects their confidence in the sustainability of earnings and the company’s long-term growth strategy. Notably, Omnia also declared a special dividend during the same period last year. Payment is due in August.
• SAB Zenzele, a shareholder of AB InBev, recently declared a special dividend. The company receives a portion of AB InBev’s dividends and, after accounting for operational expenses, tax, and loan obligations, distributes the remainder to its shareholders - including employees, retailers, and the public. The payout will be made in June.
• Trencor Limited has proposed a voluntary winding-up and, in anticipation thereof, the Board has resolved to declare and pay a special cash dividend to shareholders as part of the delisting process. The special dividend is expected to be paid in July.

On the ex-dividend date, a share’s price typically drops by the value of the dividend, as new buyers are no longer entitled to the payout. This adjustment reflects the cash leaving the company to be distributed to existing shareholders.

• Shares that qualify for ordinary (and special) dividends are those bought before or on the last day to trade.

Conclusion 

Investors should keep an eye on company guidance, debt levels, and capital allocation strategies to gauge future prospects and not base decisions solely on headline dividend announcements. Evaluating the context behind these payouts, alongside broader market and economic conditions, could help investors make more informed decisions. Looking ahead, future share performance will be influenced by factors such as market sentiment, macroeconomic conditions, and each company’s operational performance. Industry trends and global events also play a role. For long-term investors, reinvesting dividends - even special ones - could contribute to compounded returns over time.

The EasyEquities reinvestment feature allows investors to automatically purchase shares or reinvest using the net dividend paid to shareholders. Unlike DRIP (Dividend Reinvestment Program or Dividend Reinvestment Plan), the reinvestment is treated as an ordinary transaction.

Government bonds offer a reliable way to earn fixed income by lending money to the government in exchange for regular interest payments. 

Dividends are one of the many key components of investing, representing a share of a company's profits distributed to its shareholders. 

Special dividends, also known as extraordinary dividends, are one-time payments made by companies to shareholders due to specific financial events, like windfall profits or asset sales.