Roth IRA vs. Taxable Account: How Much of $13,467 in Dividends Would You Keep?

At the 24% bracket, a $500,000 equal-weight portfolio of six dividend growth stocks generates about $13,467 a year in dividends. Held in a taxable account, roughly $2,020 of that goes to the IRS every year.

Roth vs. Taxable: Six Dividend Growers Side by Side

For 2026, the 24% bracket covers taxable income over $105,700 for single filers ($211,400 for married couples filing jointly). All six stocks here pay qualified dividends, which the tax code includes as net capital gain (26 U.S.C. § 1(h)(11)(A)). That means a 24% filer generally pays the 15% rate instead of 24%. The Roth still shields every dollar.

The annual Roth advantage is $2,020. Over 10 years, with no growth and no new contributions, that totals $20,200.

Each position is about $83,333:

• Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction): yields 1.95%, or $1,625 a year. The quarterly payout rose to $1.34 from $1.30, and every raise increases the income stream the Roth protects.
• Procter & Gamble (NYSE:PG): yields 2.66%, or $2,217. Its quarterly dividend rose to $1.0885 from $1.0568, and its quarterly record dates back to 1999 in the data.
• Coca-Cola (NYSE:KO): yields 2.19%, or $1,825. The payout rose to $0.53 from $0.51, and it has increased every year on record.
• PepsiCo (NASDAQ:PEP): yields 4.23%, the highest of the six, producing $3,525. It has the largest annual tax bill in a taxable account, making it the top Roth candidate in this group.
• McDonald’s (NYSE:MCD): yields 2.85%, or $2,375. The newly declared $1.93 quarterly payout, up from $1.86, adds to the tax-free stream.
• ADP (NASDAQ:ADP): yields 2.28%, or $1,900. ADP raised its quarterly dividend from $1.40 to $1.54 to $1.70 in two straight steps, the fastest growth in this group.

Higher Brackets Pay a Steeper Toll

The 3.8% net investment income tax applies above $200,000 of modified AGI for single filers and $250,000 for joint filers (26 U.S.C. § 1411). Top earners also move into the 20% qualified dividend level. The rows below assume a single filer whose income is above the NIIT threshold at the 32% and 37% brackets.

Moving from the 24% bracket to the 37% bracket raises the annual tax cost of holding these stocks by more than half.

Compounding Makes the Gap Bigger Every Year

Reinvest the $2,020 annual delta at a conservative 4%, and the 24% bracket advantage reaches $24,252 after 10 years and $60,152 after 20. Without reinvestment, the 20-year total would be $40,400. At the 37% bracket, the 20-year figure rises to $95,441.

The calculations assume flat dividends, so they understate the gap. All six companies raised their payouts within the past two years. Each increase makes the taxable account’s annual tax bill bigger and adds to the income the Roth keeps in full. Think of these figures as the ongoing cost of holding dividend growers where their payouts are taxed each year, before any growth.

What to Do Before Year-End

• Get out your 1099-DIV and multiply qualified dividends from these six names by your actual rate, including the 3.8% NIIT if your MAGI is above $200,000 single or $250,000 joint.
• Rank your taxable positions by dollar tax cost, not yield percentage. PepsiCo’s $3,525 income stream comes first here.
• If you are considering a Roth conversion, compare the one-time conversion tax with the $60,152 20-year compounded delta at your own bracket (we sized up the quiet years between the end of your career and your first RMD, when conversions are cheapest, in a free Roth guide here).

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