How to Build $4,925 a Month in Tax-Free Dividend Income Inside a Roth IRA
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A $4,925 monthly paycheck works out to $59,100 a year, and if you stash the right income investments in a Roth IRA, the IRS never takes a cut. With this in mind, here is what that paycheck costs at different yields, plus a six-holding mix built to pay it.
What $59,100 a Year Costs at Each Yield
The formula fits on one line: annual income divided by yield equals the money you need invested.
| Tier | Yield | Math | Capital Needed |
|---|---|---|---|
| Conservative | 3.5% | $59,100 divided by 0.035 | about $1,689,000 |
| Moderate | 6% | $59,100 divided by 0.06 | $985,000 |
| This portfolio | 7.7% | $59,100 divided by 0.077 | $767,532 |
| Aggressive | 11% | $59,100 divided by 0.11 | about $537,000 |
Dividend-growth funds need the most money, but the payout and the principal both tend to grow. REITs and high-dividend stocks cut the bill, and raises come slower. BDCs (business development companies), covered-call funds and junk bonds ask the least upfront. You often pay for that with shrinking principal and dividend cuts. At today’s prices and payouts, the mix below yields closer to 8.1%, so the 7.7% planning figure leaves a small buffer for emergencies, etc.
Six Holdings Behind the Paycheck
Option Income: 25%
Goldman Sachs Nasdaq-100 Premium Income ETF (NASDAQ:GPIQ) owns Nasdaq-100 names and writes call options on them for cash. It has the biggest weight (25%) and pays monthly at roughly 10.7%. The risk: payouts can include return of capital (your own money handed back), and they fall when markets calm down and option premiums shrink. The latest check came in below the prior one.
Dividend Stocks: 15%
Anchoring the growth side, the ALPS Sector Dividend Dogs ETF holds about 50 high-yielding stocks, weighted equally across sectors, and yields around 3.4%. Its quarterly checks vary, so budget for uneven payments.
Net Lease REIT: 15%
Warehouses, factories, and stores leased long term fill the portfolio of Broadstone Net Lease (NYSE:BNL). Occupancy stands at 100%, and it just raised its dividend again. It yields about 6.7%. Debt runs at 6.6x[1] adjusted EBITDAre (a real estate cash earnings measure), and higher rates make that more expensive.
Business Development Company: 15%
Carlyle Secured Lending (NASDAQ:CGBD) lends to middle-market private companies, and 96% of the portfolio is senior secured. It yields about 12.6%. It has cut its quarterly payout twice since early 2025, and seven borrowers[2] have stopped paying interest.
Food Stock: 15%
At Kraft Heinz (NASDAQ:KHC | KHC Price Prediction), management just raised 2026 adjusted EPS guidance to $2.07-$2.13[3], and shares yield about 6.4%. Still, North American organic sales fell 3%[3], and the dividend hasn’t grown since 2019.
Fallen Angel Bonds: 15%
Bonds downgraded from investment grade to junk are the specialty of the VanEck Fallen Angel High Yield Bond ETF (NASDAQ:ANGL). It pays monthly at roughly 7.4% and charges a quarter of 1% a year. A recession, though, can push more issuers toward default.
Why Big Payers Belong in a Roth
Qualified Roth withdrawals “shall not be includible in gross income”[4] under 26 U.S.C. § 408A(d)(1). To qualify, you generally need to be 59½ and past a 5-tax-year[4] window that starts with your initial Roth contribution. Original owners also skip required minimum distributions, per the IRS: “The RMD rules do not apply to Roth IRAs or Designated Roth accounts while the owner is alive.”
REIT and BDC payouts are mostly taxed as ordinary income in a regular account. In a Roth IRA, that tax bill disappears. The catch is the cap: $7,500 for 2026, or $8,600 at age 50 and older. Most people build a Roth this size through conversions and rollovers, then shape it into something that pays on a schedule (we walked through the mix, the payment calendar and the withdrawal order in a free guide here).
Why a 3.5% Yield Can Beat a 12% Yield
Put about $1,689,000 into 3.5% payers whose dividends grow 8% a year, and your $59,100 paycheck grows to about $118,000 by year nine. A 12% payer with no raises stays stuck at its starting check, and that’s if it holds. Kraft Heinz shows the flat path: the dividend has stayed the same since 2019, while shares lost about 50% over ten years.
Three Moves Before You Build It
- Price your real spending. Your budget sets the target. Cutting $500 a month off the target lowers the capital you need.
- Start the five-year clock now. Even a small Roth contribution this year starts the five-year window for qualified withdrawals.
- Check every payout once a year. Compare each holding’s last 12 months of payouts with the year before, and look for principal being returned in the option-income fund.
Your paycheck is only as steady as the businesses behind it.
Contact [email protected] for any questions or corrections.
David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
