Should I hold high-dividend stocks in a Roth or a taxable account?
It depends on the type of dividends and your goals. If the dividends are qualified, they already enjoy the low 0%/15%/20% rates in a taxable account, so the case for sheltering them is weaker. If they're non-qualified (like from REITs or many high-yield funds), they're taxed as ordinary income and are better off inside a retirement account. A Roth is especially attractive for high-growth or high-income assets you expect to appreciate a lot, since all future dividends and gains come out tax-free. For retirees who want a tax-free income stream, holding dividend payers in a Roth can be appealing. Match the placement to whether the income is qualified and how long you'll hold.
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