Datatec: Take the R29.00 per Share Dividend OR Re-Invest?

Many people have seen the opportunity to vote between two options with regards to Dataec’s upcoming dividend.

Essentially if you do NOT opt to take the special dividend in more shares you will still receive R29.00 per share in cash.

Making the decision a tad more difficult is the overnight steep drop in share price from R85.70 on 13 October to R50.95 at midday today.

If one looks purely at the monetary value of both, then the R29.00 per share looks slightly more attractive.

BUT, what you choose to do is dependant on a number of factors.

The drop in Datatec’s share price around the ex-dividend date (October 14, 2026) is standard mechanics rather than a business failure. When a company pays out a huge R29.00 per share (2,900 cents) special dividend, its market capitalization and share price adjust downwards on the ex-dividend date by roughly that exact cash amount. The value didn’t vanish – it was simply removed from the balance sheet to be distributed to shareholders.

Evaluating both options depends on your tax situation and investment goals:

OPTION 1: CASH DIVIDEND (THE DEFAULT)

Gross Payout: R29.00 per share.

Net Cash Received: R23.20 per share (after 20% Dividend Withholding Tax).

For 100.5 Shares: R2,331.60 net in your account.

Pros:

Immediate Liquidity: You get cash in hand that you can withdraw, use to rebalance your portfolio, or invest elsewhere.

Simplicity: It requires zero action on EasyEquities (it applies automatically if you do nothing).

Cons:

Tax Drag: You lose 20% immediately to Dividend Withholding Tax (DWT).

Dilution: Because new shares will be issued to scrip subscribers, your percentage ownership of Datatec will drop slightly if you take the cash.

OPTION 2: SCRIP DIVIDEND (NEW SHARES)

Ratio: 57.28241 new shares per 100 shares held.

For 100.5 Shares: ~57.57 new shares.

Pros:

No Immediate Cash Leakage (Tax Efficiency): Scrip distributions issued from share capital or premium are generally treated as a capitalization issue. No 20% DWT is withheld upfront, meaning 100% of the distribution value remains working in Datatec stock.

Protects Against Dilution: You maintain (or slightly increase) your overall ownership stake in Datatec relative to shareholders who take cash.

Zero Transaction Costs: EasyEquities credits the new shares without you paying brokerage or trade fees.

Cons:

Capital Gains Tax (CGT) Base: The new shares come in at a zero base cost (@ 0), meaning when you eventually sell these specific shares down the line, the full proceeds will be subject to CGT calculation.

Continued Exposure: You are doubling down on Datatec stock rather than diversifying into cash.

DECISION FRAMEWORK

Choose Cash if: You need liquid capital, want to derisk your holding in Datatec, or plan to reallocate those funds into other assets or local opportunities.

Choose Scrip if: You remain bullish on Datatec’s long-term growth (particularly in Westcon International and Logicalis) and want to avoid the immediate 20% DWT haircut by automatically compounding your shareholding.

What Did I do?

I voted for the scrip option which will increase my December dividend payout from Datatec and also based on the trendline of the share price from a low of R23.70 (6 April 2020) to today’s low of R50.72.

Of course if the share descends to below R23.70 then I will be left with egg on my face and a decidely emptier share portfolio.