Analysts Urge 4 High-Yield Stocks in Roth IRAs to Shield $5,230 Annual Tax Drag
Updated
Updated · 24/7 Wall St. · Aug 25
Analysts Urge 4 High-Yield Stocks in Roth IRAs to Shield $5,230 Annual Tax Drag
3 articles · Updated · 24/7 Wall St. · Aug 25
Summary
$500,000 split equally across Kraft Heinz, Kimberly-Clark, Exelon and Principal Financial would generate about $21,800 in annual dividends, with a Roth IRA preserving the full amount versus roughly $16,570 after tax in a taxable account.
At the 24% federal ordinary-income bracket, that placement decision avoids about $5,230 a year in taxes; over 10 years, the cumulative drag reaches roughly $52,300 before any reinvestment, dividend growth or price gains.
Kraft Heinz, yielding 6.23%, is presented as the top Roth candidate because its higher payout creates the biggest tax hit outside a Roth, while Kimberly-Clark yields 4.67%, Exelon 3.64% and Principal Financial 2.89%.
The advantage scales with income: the same portfolio would forfeit about $4,796 annually at a 22% bracket and $8,066 at 37%, extending the broader case analysts have made for sheltering high-yield dividend payers in Roth accounts.