It is officially divided B&M European retail value (LSE:BME) offer a dividend yield of 8%. However, investors can potentially expect much more in the future.

The 8% figure does not take into account the company’s special dividends, which are paid quite regularly. And although investors are under pressure now, they should look further into the future.

Dividends and dividends

Over the last five years, B&M has paid out 77.3p in ordinary dividends, which is almost half the current share price. But that’s only part of the story.

The company also returned £1 in the form of a special dividend, which was paid each year in January or February. They are a huge source of passive income for shareholders.

Over the last 12 months, the company returned a total of 28.2p in cash to investors. Of this, 13.2 pence was an ordinary dividend and 15 pence was a special dividend.

At today’s prices, this means a dividend yield of 17%. That’s a huge potential return, but investors need to keep a few things in mind when it comes to the stock’s future.

Trouble lies ahead

B&M will be announcing an upcoming special dividend in the next few days. But investors probably shouldn’t hold their breath on this news.

From 2022, the company has reduced its special dividend twice, from 25p to 15p. This was due to challenging trading conditions, but the last 12 months have been no better.

Sales growth was delicate compared to the same period, and rising costs put pressure on margins, causing profits to decline. And recently, an even bigger problem has arisen.

In October, the company reported a £7 million accounting error related to overseas shipping costs. And while this is the case, special dividends seem extremely unlikely to me.

Are shares still inexpensive?

Even without a special dividend, investors might think that an 8% yield from a regular distribution would be enough to make the stock fascinating. But it looks very risky at the moment.

Following the discovery of the irregularities, B&M organized an independent investigation into its accounting. It’s not unusual – that’s the point Wistry AND W. H. Smith he did after similar discoveries.

The problem is that it’s almost impossible to predict what this will bring. Without knowing what it might bring, it’s impossible to accurately evaluate the stock from an investment perspective.

This may change in the future as all details become clear. However, investing based on the expectation of dividend returns over the last few years seems very risky to me.

Over the last few years, B&M shares have been an excellent source of dividends for investors. The dividend fell on delicate trading results, but there was reason for optimism.

However, an accounting irregularity makes the situation look completely different. With that in mind, investing right now is more of a guess.

Dividends over the last 12 months would mean a yield of 17% at today’s prices. This is a huge potential return, but I think there are much better opportunities available.