$200,000 in Dividend Stocks: How a Roth IRA Could Save You $2,166 a Year
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Put $200,000 into six well-known high-yield stocks, and you would collect about $11,400 a year. If you hold these stocks outside a tax-advantaged account in the 24% bracket, roughly $2,166 of that goes to the IRS every year. Most of that tax comes from the two highest yielders.
Roth Versus Taxable: A $2,166 Gap Every Year
The portfolio puts an equal $33,333 into each of six NYSE payers. On the taxable side, MPLX (NYSE:MPLX | MPLX Price Prediction) and VICI Properties (NYSE:VICI) distributions are taxed at the 24% ordinary rate. The four C-corporations are taxed at the 15% qualified rate because qualified dividends count as net capital gain under 26 U.S.C. § 1(h)(11). For 2025, the 24% bracket covers single filers with taxable income from $103,351 to $197,300.
| Stock | Yield | Annual Income | Taxable Cost at 24% |
|---|---|---|---|
| MPLX | 8.03% | $2,677 | $642 |
| VICI | 7.18% | $2,393 | $574 |
| United Parcel Service (NYSE:UPS) | 5.91% | $1,970 | $296 |
| AT&T (NYSE:T) | 5.13% | $1,710 | $257 |
| Bristol-Myers Squibb (NYSE:BMY) | 3.99% | $1,330 | $200 |
| Kinder Morgan (NYSE:KMI) | 3.96% | $1,320 | $198 |
A Roth account keeps the full $11,400. Outside a tax-advantaged wrapper, it keeps $9,234. That is an annual gap of $2,166, or $21,663 over 10 years with no growth expected. Federal law excludes qualified Roth distributions from gross income under 26 U.S.C. § 408A(d)(1).
Why Each Stock Fits the Roth
- MPLX: The top income producer. MPLX raised its distribution 12.5% to $1.2111 per unit, with 1.3x coverage. Its K-1 tax treatment is complex: much of the payout is often classified as return of capital, and MLPs held in IRAs can raise UBTI issues above $1,000.
- VICI: REIT dividends have ordinary income tax treatment, which makes VICI a natural Roth holding. The $0.46 quarterly dividend runs at about a 75% AFFO payout.
- United Parcel Service: UPS has the highest yield of the C-corporations. Coverage is tight, though: guided dividend payments of about $5.4 billion compare with about $6.1 billion of adjusted free cash flow.
- AT&T: AT&T plans to hold its $1.11 annual dividend steady through 2028, supported by a 2026 free cash flow outlook of $18B+.
- Bristol-Myers Squibb: The $2.52 annual dividend sits well below non-GAAP EPS guidance of $6.35 to $6.55.
- Kinder Morgan: Kinder Morgan raised its $1.19 annual dividend by 2%. Leverage is about 3.5x, and the project backlog is $14.4 billion.
Bracket Multiplier: Top Earners Give Up $3,142 a Year
| Bracket | Taxable Net | Roth Net | The Roth’s Yearly Advantage |
|---|---|---|---|
| 22% | $9,335 | $11,400 | $2,065 |
| 24% | $9,234 | $11,400 | $2,166 |
| 32% | $8,828 | $11,400 | $2,572 |
| 37% | $8,258 | $11,400 | $3,142 |
The qualified rate stays at 15% from the 22% bracket through the 32% bracket and rises to 20% at the top. That means nearly all of the increase across brackets comes from MPLX and VICI. At 24%, those two account for $1,217 of the $2,166 total owed to the IRS. High earners may also owe the net investment income tax, which these figures leave out.
Compounding Makes the Gap Bigger Every Year
The 24% bracket gap of $2,166 adds up to $43,326 over 20 years before any reinvestment. Reinvest each year’s savings inside the Roth at a conservative 4%, and the total reaches $26,009 after 10 years and $64,508 after 20. No price appreciation is included. The figure measures how much income holding these stocks outside a tax-advantaged account costs over time.
What to Do Before Your Next Filing
- Pull your 1099-DIV and K-1 forms and multiply ordinary distributions from REITs and MLPs by your top tax rate. That is your real annual cost.
- Look at return-of-capital and UBTI rules for MPLX before moving it. VICI-style REITs have simpler tax treatment to research.
- Build a phased Roth conversion that starts with ordinary-income payers. Compare the tax due on the conversion with the 20-year income gap for your bracket.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
