In this article, we will take a look at some of the best Roth IRA stocks.
A Roth IRA, or individual retirement account, is a tax-advantaged savings plan designed for retirement. Unlike employer-sponsored plans such as 401(k)s, a Roth IRA is managed independently. This means the account is opened directly with a financial provider, contributions are arranged personally, and investment choices—whether selecting assets individually or working with an investment manager—are entirely up to the account holder. Roth IRAs are accessible only to individuals with a modified adjusted gross income (MAGI) below $165,000 for single filers. The annual contribution limit is set at $7,000, with an increased cap of $8,000 for those aged 50 and older. For individuals earning more than $150,000, contribution limits gradually phase out.
Roth IRAs are not just popular among retirees; they are also gaining traction among young investors. Data from the US Federal Reserve, analyzed by Boston College’s Center for Retirement Research (CRR), shows that the share of households led by individuals in their 20s who own a Roth IRA has surged, rising from 6.6% in 2016 to 19.2% in 2022. Surya Kolluri, head of the TIAA Institute, has highlighted the Roth IRA as one of the most effective tools for retirement savings. He noted that the potential for tax-free growth over several decades could have a significant impact on long-term wealth.
According to an analysis by the Center for Retirement Research (CRR), the increase in Roth IRA adoption has been most pronounced among the highest-earning third of households. The organization attributes this trend in part to fintech platforms like Robinhood, which have made financial instruments more accessible in recent years.
Another contributing factor has been the investment activity of younger households, particularly those with higher incomes. Many were able to invest substantial amounts during the pandemic, relative to their previous financial positions. Research from the Federal Reserve indicated that inflation-adjusted wealth for Americans under 40 surged by an impressive 80% between the first quarter of 2019 and the third quarter of 2023, largely driven by stock market gains. Evan Potash, executive wealth management advisor at TIAA, made the following comment about it:
“During the pandemic, people had more time on their hands, stimulus checks, and took an opportunity on the market decline. This is complemented by the fact that younger people starting out in their careers, who tend to make less than those further on in their career cycle, haven’t phased out yet for Roth IRA contributions.”
While the rise in Roth IRA participation is beneficial for higher earners, those with lower incomes have not experienced the same level of growth. Research from the CRR found that in 2022, only 4% of households led by individuals in their twenties from the lowest third of the income distribution were investing in a Roth IRA. Although this marks an increase from 2% in 2016, it remains far below the 41% participation rate among those in the top third of earners.
Additional studies indicate that the wealth gap between the richest and poorest young individuals continues to widen. Research published by the University of Chicago Press shows that the wealthiest 10% of millennials hold 20% more wealth than the richest baby boomers did at the same age. In contrast, those at the lower end of the income scale have either seen little to no growth in their wealth or, in some cases, a decline.
When building a Roth IRA portfolio, it is essential to focus on diversification to maximize long-term growth while managing risk. A well-balanced portfolio can include a mix of various asset classes that cater to different investment goals and risk tolerances. According to analysts, it may be beneficial to maintain a well-rounded portfolio that includes index funds, such as those tracking the broader market, along with dividend-paying and value stocks. In addition, investors might consider target-date funds or a combination of stocks, bonds, and real estate investment trusts (REITs) to enhance diversification. Given this, we will take a look at some of the best Roth IRA stocks to invest in.
Photo by Diana Parkhouse on Unsplash
Our Methodology
For this article, we selected companies that have long-term growth catalysts, dividend growth history, solid business fundamentals, and positive analyst coverage. From that group, we further refined our selection criteria by identifying stocks with a projected upside potential of over 7% based on analyst price targets, as of March 23. The stocks are ranked according to their upside potential.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. McDonald’s Corporation (NYSE:MCD)
Analysts Upside Potential: 7.15%
McDonald’s Corporation (NYSE:MCD) is an American multinational fast food chain. The company operates close to 43,000 locations globally, but only around 5% are directly owned and run by the parent company. The remaining 95% are franchised, and managed by independent owners and third parties who use the well-known brand to generate profits.
McDonald’s Corporation (NYSE:MCD)’s quarterly performance fell short of expectations, partly due to an E. Coli outbreak, but broader challenges persisted beyond this period. In the fourth quarter of 2024, the company reported $6.4 billion in revenue, marking a slight 0.2% decline from the previous year and falling short of analyst expectations by over $88 million. Global same-store sales, which track locations open for at least a year, edged up 0.4%. However, in the U.S., same-store sales declined by 1.4%, signaling slowing growth and challenges in maintaining sales momentum. That said, the stock’s returns over the past 5 years came in at over 86% and in 2025 so far, the stock has surged by over 4%.
In addition, McDonald’s Corporation (NYSE:MCD) continues to attract investors with its strong dividend track record and financial stability. The company offers a quarterly dividend of $1.77 per share, yielding 2.32%. By the end of fiscal 2024, it had more than $1 billion in cash and cash equivalents, with total assets approaching $12 billion. It has also increased its dividend for 48 consecutive years, which makes it one of the best Roth IRA stocks.
9. Verizon Communications Inc. (NYSE:VZ)
Analysts Upside Potential: 8.01%
Verizon Communications Inc. (NYSE:VZ) is a New York-based that specializes in communications, technology, and other entertainment services. On March 12, Verizon Business introduced Trusted Connection, a cybersecurity solution designed to safeguard businesses from cyber threats by securing connections and devices across their digital networks. It targets midsize companies that require robust security without the burden of managing it themselves.
Earlier this month, Verizon Communications Inc. (NYSE:VZ) management warned that first-quarter results might not meet expectations. The company cited intensified competition and broader economic uncertainty in the US as key challenges. While Verizon reduced promotional offers at the start of the year, competitors maintained aggressive deals, making its plans seem less attractive. Despite these concerns, investors and analysts remain optimistic about Verizon’s outlook, with the stock climbing over 9% since the beginning of 2025.
Verizon Communications Inc. (NYSE:VZ) remains a strong choice for investors due to its solid cash flow and commitment to innovation. It currently pays a quarterly dividend of $0.6775 per share and has an attractive dividend yield of 6.61%, as of March 23. In fiscal 2024, the company reported $37 billion in operating cash flow, while free cash flow grew to $19.8 billion from $18.7 billion the previous year. Due to this cash generation, the company was able to grow its payouts for 18 consecutive years. VZ is one of the best Roth IRA stocks on our list.
