Quick Read
Ares Capital (ARCC) at 10.34% and Main Street Capital (MAIN) at 7.99% are the strongest Roth candidates because their distributions are taxed as ordinary income at full marginal rates.
A $500,000 portfolio in these five stocks costs $7,198 annually in taxes inside a taxable account, compounding to $214,000 lost over 20 years.
At the 37% bracket, the annual Roth advantage exceeds $10,500, driven almost entirely by BDC income taxed at the full marginal rate every year.
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A $500,000 portfolio split evenly across five dividend stocks yielding over 6% produces about $36,988 a year in gross income. In the 24% bracket, roughly $7,198 goes to the IRS each year when the shares sit in a taxable account.
For 2026, the 24% bracket applies to taxable income from $105,700 to $201,775 for single filers and $211,400 to $403,550 for married couples filing jointly. Below are five high-yield names, the tax each one generates outside a Roth, and how the gap grows over time.
24/7 Wall St. Five Stocks Yielding Over 6% That Belong in a Roth
Each yield below is the annualized forward dividend divided by the share price on October 8, 2026. For Main Street Capital, the yield uses trailing 12-month payouts, which include its extra dividends.
Altria: 6.30%
Altria (NYSE:MO) trades at $70.47 and pays an annualized forward dividend of $4.44, which works out to a 6.30% yield. The quarterly payout rose to $1.11 from $1.06 with the September 15 ex-dividend date. Because Altria raises its dividend almost every year, the tax owed on those payouts climbs right along with it. A Roth keeps all of that growth.
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Verizon: 6.16%
Verizon (NYSE:VZ) pays $2.83 per share for $45.92, for a 6.16% yield. Management raised full-year 2026 adjusted EPS guidance to $4.99 to $5.04. Most of Verizon’s total return comes from income, which makes it a good fit for an account where income is never taxed.
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Pfizer: 6.20%
Pfizer (NYSE:PFE) pays $1.72 a year at $27.76, a 6.20% yield. It beat second-quarter expectations with adjusted EPS of $0.77 versus $0.68 and raised its 2026 revenue guidance to $60.5 billion to $62.5 billion. The shares are down 14.72% over five years, so for long-term holders, the dividend has done most of the work.
Ares Capital: 10.34%
Ares Capital (NASDAQ:ARCC) pays $1.92 a year at $18.57, a 10.34% yield. As a business development company (BDC), it pays distributions that are predominantly ordinary income taxed at marginal rates. That makes it the strongest Roth candidate on this list. It has paid stable or rising regular dividends for 17 consecutive years.
Main Street Capital: 7.99%
Main Street Capital (NYSE:MAIN) paid $4.33 over the trailing 12 months for $54.20, a 7.99% yield. The regular monthly dividend alone yields 5.64%. The $0.30 supplemental dividend in September, its 20th straight quarterly supplemental, pushes the total above 6%. Its distributions are also ordinary income, and fourth-quarter regular monthly payments are set at $0.27.
Dow Falls Below the 6% Cutoff
Dow (NYSE:DOW) cut its quarterly dividend from $0.70 to $0.35 starting with the August 2025 payment. At $28.28, Dow now yields 4.95%, so it is left out of the portfolio. Its history is a reminder that cyclical payouts can shrink.
Roth Versus Taxable: $7,198 a Year at the 24% Bracket
Each stock gets a $100,000 position. Altria, Verizon, and Pfizer pay qualified dividends, which most filers in the 24% bracket pay 15% tax on. The two BDCs are taxed at the full 24%.
That Roth edge comes to $7,198 a year, or $71,977 over 10 years with no new contributions and no growth. Ares Capital and Main Street Capital make about half the income but 61% of the tax bill. The gap would be even wider once state taxes and the 3.8% net investment income tax are included.
Higher Brackets Mean a Bigger Roth Advantage Compounding Turns $7,198 a Year Into $214,000
The yearly gap is only part of the cost. Money that would have gone to taxes gets reinvested in a Roth and keeps growing tax-free. The figures below assume no change in share prices and a conservative 4% return on the reinvested tax savings.
10 years, no reinvestment: $71,977
10 years, reinvested at 4%: $86,416
20 years, no reinvestment: $143,954
20 years, reinvested at 4%: $214,333
At the 37% bracket, the same 20-year figure reaches $313,066. At 22%, it is $203,417. Those amounts are what holding this income portfolio outside a Roth costs over time. They assume dividends stay flat. Altria and Main Street Capital have raised their payouts steadily, so with continued increases the real gap would likely be larger. The lowest-tax years to move these positions into a Roth are usually those between a final paycheck and the first required minimum distribution, a window we sized up in a free Roth report here.
Three Steps to Take Before Your Next Tax Filing
Check your 1099-DIV for every BDC you own outside a Roth. Compare ordinary dividends with qualified dividends for holdings like Ares Capital and Main Street Capital, then multiply the ordinary amount by your marginal rate. At 24%, the BDC piece in this example costs $4,399 a year.
Start with a phased Roth conversion that leads with ordinary-income payers. Converting the BDC positions first moves the highest-taxed dollars into the Roth. You pay the conversion tax once, while the taxable-account bill repeats every year.
Recheck yields every year. Dow Inc. fell below the 6% cutoff after it cut its dividend. Roth space works hardest when it holds the highest-yielding ordinary-income positions, so it pays to review what sits in the account at least once a year.
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