High-income investors in the 32% federal tax bracket face heavy taxes on ordinary-income dividends held in taxable accounts, losing nearly a third of dividend income to taxes. Holding these dividends in a Roth IRA avoids this tax, preserving the full income and allowing tax-free reinvestment growth. Stocks like Ares Capital, Main Street Capital, Prospect Capital, and Oxford Lane Capital pay ordinary dividends that are best placed in Roth IRAs to maximize after-tax returns. The tax advantage grows significantly over time, making Roth placement a crucial strategy for high-yield ordinary-income stocks.
This monthly series highlights five large-cap, dividend-paying stocks trading at significant discounts compared to their historical norms, selected from over 7,500 U.S.-listed companies. The primary list offers an average yield of 4.2%, with two addi...
A married couple in the 24% federal tax bracket earning $80,000 from BDCs and mortgage REITs in a taxable account pays $19,200 in federal taxes annually. Holding these investments inside a Roth IRA avoids this tax, allowing the full $80,000 dividend ...
