Investing £20,000 in this FTSE 250 stock today could earn investors £1,944 in income this year.

You share B&M Value Europe (LSE:BME) could be a passive gold mine for investors in 2025 – and beyond. In addition to its general budget, the company recently announced a one-off distribution of £151m.

That means the company will return just under 10% of the market average to shareholders this year in cash. But investors considering jumping on this opportunity should consider a few things first.

Problems

B&M announced a special dividend this week as part of its trading review for the period covering the last three months of 2024. But the report as a whole went down like a lead balloon.

Adjusted for exchange rates, revenue was 2.8% higher than last year. And while profits were also high (at an undisclosed amount), that’s where the good news ended for investors.

The increase in sales was entirely a result of the company expanding the number of its stores. On average, revenue per store was down 2.8% – and this is a continuation of a worrying trend.

Comparable sales were down 1.9% last quarter and 5.1% the year before. That’s why the stock has been falling consistently for the past nine months.

Sooner or later, that must change if B&M is to avoid stagnation. The company will not be able to continue opening stores forever without them getting into trouble.

The current rate of store expansion is approximately 6%. So unless the decline in like-for-like sales stops soon, the business will find its profit growth falling behind inflation, which could be a problem.

Assignments

A special dividend of £151m – equivalent to 15p per share – is felt as a result for shareholders. But this is less than what B&M has distributed in previous years.

For the past five years, the company has paid a single distribution of 25p or 20p per share each year. So the 15p announcement this week represents a dividend cut.

I think this should make B&M shareholders think carefully about the dividend outlook in 2025. But there are also clear reasons for optimism.

Although comparable sales were down last quarter, management reported that this started to improve in December. And the company starts in 2025 in a strong position of innovation.

The stock has also reached a point where it can be a good income investment regardless of business growth. paid a dividend of 9.72 %. Of course, the benefits are never guaranteed.

This means that an investment of £20,000 today could return £1,944 in dividends this year. And that’s enough to make me take it seriously.

An opportunity?

A dividend yield of 9.72% is the kind of thing investors often find in tobacco companies. But unlike British American cigarsI can’t believe that B&M’s core business is declining.

Like-for-like sales have been lagging behind, but the company as a whole continues to move forward. The stock is risky, but I think investors looking for income should consider it.