3 Blue-Chip Dividend Stocks That Show Why Roth IRA Income Can Be Worth More

Put $100,000 into three blue-chip dividend payers equally, and it pays about $3,968 a year. In a taxable brokerage account in the 24% tax bracket, about $595 of that goes to the IRS each year. In a Roth IRA, every dollar stays in the account.

Roth Vs. Taxable: What $100,000 Keeps

The portfolio holds $100,000 split equally across Bristol-Myers Squibb (NYSE:BMY | BMY Price Prediction), Truist Financial (NYSE:TFC), and U.S. Bancorp (NYSE:USB). All three pay qualified dividends. Those are taxed at capital gains rates of 0%, 15%, or 20% under 26 U.S.C. § 1(h)(1), which are lower than ordinary income rates. In 2026, the 24% bracket covers taxable income over $105,700 for single filers ($211,400 for married couples filing jointly), and taxpayers at that level pay 15% on qualified dividends.

The Roth advantage is $595 a year, or $5,952 over 10 years, before any growth. The gap is modest because qualified dividends already get a tax discount. A REIT or BDC paying the same income as ordinary dividends would cost $952 at 24%. With these three stocks, the Roth wins by removing the remaining 15% tax and allowing reinvested dividends to compound untaxed.

Bristol-Myers Squibb: 4.08% Yield

Based on a $2.52 annualized dividend and a $61.69 share price, Bristol-Myers yields 4.08%. That’s about $1,362 a year from a $33,333 stake. In 2025, operating cash flow of $14.16 billion minus capex left $12.85 billion of free cash flow, about 2.5 times the dividends paid. The quarterly payout has risen from $0.45 in 2020 to $0.63. Risk: revenue from the legacy portfolio is expected to fall 4% to 6% in 2026.

Truist Financial: 4.24% Yield

Truist yields 4.24% on a $2.08 annual dividend, which comes to about $1,412 a year on its share of the portfolio. Common dividends in 2025 came to about 56% of net income. Third-quarter adjusted EPS of $1.16 beat estimates. Risk: the dividend has stayed at $0.52 per share every quarter since late 2022, so income hasn’t grown while the bank sells off its RAC and LightStream businesses.

U.S. Bancorp: 3.58% Yield

U.S. Bancorp yields 3.58% on a $2.16 forward dividend, which comes to about $1,194 a year. Dividends in 2025 accounted for about 46% of net income, and the quarterly payout recently rose from $0.52 to $0.54. Risk: management paused buybacks after a rate move cut capital ratios by 40 basis points.

Higher Brackets Pay a Bigger Toll

The 3.8% net investment income tax applies once modified AGI passes $200,000 for single filers or $250,000 for joint filers (26 U.S.C. § 1411). Every taxpayer in the 32% and 37% brackets is above that line.

What Holding These Outside a Roth Costs Over 20 Years

At 24%, assume the $595 saved each year is reinvested at a conservative 4%. That adds up to about $7,146 after 10 years and $17,724 after 20 years. The math leaves out share price gains and dividend raises. It counts only the tax you’d owe on these holdings, and that money is gone for good. Future dividends depend on board decisions and aren’t guaranteed. If you’re considering a conversion, the quiet stretch before your first RMD is usually the cheapest time to do it, which is the whole subject of our free Roth Window guide.

Three Steps to Take Before Your Next Tax Filing

• Compare boxes 1a and 1b on your 1099-DIV for these holdings. Then multiply the qualified dividends by your actual rate (15%, 18.8% or 23.8%) to see what you lose to taxes each year.
• If you also own REITs, BDCs, or mortgage REITs in a taxable account, run the numbers on those first. At the 24% bracket, the same income costs $952 in tax as ordinary dividends versus $595 as qualified dividends.
• Before converting these positions to a Roth, divide the tax due on the conversion by your annual Roth benefit from the table above. That tells you how many years it takes to break even.

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