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.
8. The Procter & Gamble Company (NYSE:PG)
Analysts Upside Potential: 8.24%
The Procter & Gamble Company (NYSE:PG) is an American multinational consumer goods company, based in Ohio. The company specializes in a broad range of products across various categories, including beauty, grooming, oral care, personal care, fabric and home care, baby and feminine products, and family care. It operates on a global scale, making it susceptible to challenges from a strong US dollar and economic slowdowns in key markets like China. However, China’s government remains optimistic about its economy, forecasting 5% growth in 2025 despite rising trade tensions. In addition, as investors shift from growth stocks to safer options, P&G has benefited from this rotation, contributing to its recent stock gains. In the past 12 months, the stock has surged by over 4%.
In fiscal Q2 2025, The Procter & Gamble Company (NYSE:PG) reported $21.9 billion in revenue, reflecting a 2% increase from the previous year and exceeding analyst expectations by more than $291 million. Organic sales, which exclude the impact of currency fluctuations, acquisitions, and divestitures, grew by 3%. While the company did not raise prices, it achieved volume growth, a crucial driver of long-term revenue. Organic volume increased by 2%, with pricing holding steady. The baby, feminine, and family care segment performed particularly well, recording a 4% increase in both organic sales and volume.
The Procter & Gamble Company (NYSE:PG) currently offers a quarterly dividend of $1.0065 per share and has a dividend yield of 2.42%, as recorded on March 23. The company has consistently raised its dividend for 68 consecutive years, supported by strong cash flow. In the latest quarter, it generated $4.8 billion in operating cash flow, with an 84% free cash flow productivity rate. Moreover, the company returned $2.4 billion to shareholders through dividends, which places it on our list of the best Roth IRA stocks.
7. The Coca-Cola Company (NYSE:KO)
Analysts Upside Potential: 10.03%
The Coca-Cola Company (NYSE:KO) ranks seventh on our list of the best Roth IRA stocks. The American multinational beverage company is popular among investors because of its cash generation and solid dividend history. It has a widespread global presence, with its popular products available in 200 countries. Its flagship brand is one of the most recognizable worldwide, attracting loyal consumers willing to pay a premium. Since the start of 2025, the stock has gained over 11%, outperforming the broader market.
In Q4 2024, The Coca-Cola Company (NYSE:KO) posted $11.5 billion in revenue, reflecting a 6.5% year-over-year increase. Organic revenue grew 14%, driven by a 9% rise in price/mix and a 5% increase in concentrate sales. Coca-Cola expanded its market share across its beverage portfolio, with Coca-Cola Zero Sugar standing out, as its unit volume surged 13% during the quarter. The company’s innovative marketing strategies have fueled its growth, adding approximately $40 billion in retail sales to its flagship brand over the past three years.
On February 20, The Coca-Cola Company (NYSE:KO) announced a 5.2% increase in its quarterly dividend to $0.51 per share, marking its 63rd consecutive year of dividend growth. The company sustained this streak by maintaining strong cash flow, generating $2.9 billion in operating cash flow and $1.6 billion in free cash flow during the quarter. In addition, it reported an adjusted operating margin of 30.7%, underscoring its profitability. As of March 23, the stock supports a dividend yield of 2.97%.
6. Union Pacific Corporation (NYSE:UNP)
Analysts Upside Potential: 13.78%
Union Pacific Corporation (NYSE:UNP) is a Nebraska-based shipping & receiving and supply chain management company. UNP is an attractive investment because railroad companies play a crucial role in transporting heavy goods, raw materials, agricultural products, and fuels efficiently over land. With the infrastructure already in place, companies like Union Pacific primarily allocate costs to maintaining their networks, covering expenses such as fuel and labor. As the economy grows, revenue in the railroad industry can increase over time. This makes investing in railroads a strategic way to capitalize on long-term US economic expansion. Since the start of 2025, the stock has surged by over 2%.
In the fourth quarter of 2024, Union Pacific Corporation (NYSE:UNP) reported $25.3 billion in revenue, marking a 1.54% increase compared to the previous year. The company reached a preliminary deal with its largest customer to reduce shipping volume by more than 50% by the second half of 2026. In addition, it has gained full control over its SurePost service. To adapt, UNP is restructuring its US network and launching a multi-year efficiency initiative aimed at streamlining operations and achieving approximately $1 billion in cost savings.
In February, Union Pacific Corporation (NYSE:UNP) increased its quarterly dividend by 0.6% to $1.64 per share, extending its streak of dividend growth to 23 consecutive years. As of March 23, the stock yields 2.29%, making it an appealing choice for income-focused investors. The company’s strong cash flow continues to support shareholder returns, generating $10.1 billion in operating cash flow and $6.3 billion in free cash flow in fiscal 2024. UNP also returned $5.9 billion to shareholders through dividends and stock buybacks.
5. American Express Company (NYSE:AXP)
Analysts Upside Potential: 18.04%
American Express Company (NYSE:AXP) is a New York-based financial services company that specializes in payment cards. In the fourth quarter of 2024, generated over $17 billion in revenue, reflecting a 9% year-over-year increase. Net income rose 12% from the previous year, exceeding $2.1 billion. The company saw record highs in annual Card Member spending, net card fee revenues, and new card acquisitions, issuing 13 million new cards throughout the year. It also expanded its global presence by adding millions of new merchant locations. Growth remained strong by year-end, with fourth-quarter billings climbing 8%, driven by higher consumer and business spending during the holiday season.
American Express Company (NYSE:AXP) is well known for its highly rewarding Membership Rewards program, which offers attractive perks and bonuses without requiring excessive spending. Unlike many competitors, the company both issues its own cards and processes transactions, giving it valuable insights into customer behavior. This allows it to tailor rewards, making its cards more appealing. As a result, many cardholders remain loyal, often using their American Express cards for years or even decades. In the past 12 months, the stock has surged by nearly 20%.
American Express Company (NYSE:AXP), one of the best Roth IRA stocks, is also a solid dividend payer. In January, the company increased its quarterly dividend by 17.1% to $0.82 per share. This represents Amex’s fourth straight year of dividend increases and its most significant raise in more than ten years. The steady growth in dividends highlights management’s confidence in the company’s long-term financial stability. The stock has a dividend yield of 1.21%, as of March 23.
4. Costco Wholesale Corporation (NASDAQ:COST)
Analysts Upside Potential: 20.29%
Costco Wholesale Corporation (NASDAQ:COST) ranks fourth on our list of the best Roth IRA stocks. The Washington-based retail company remains a favorite among investors. The late Charlie Munger, best known for his partnership with Warren Buffett, was a longtime shareholder and board member. While the retail industry is highly competitive, Costco has established itself as a dominant warehouse club where customers can purchase bulk goods through a membership-based model. The company operates nearly 900 warehouse locations worldwide, with 617 in the US. In the past year, the stock has surged by over 24%.
In its fiscal first quarter of 2025, Costco Wholesale Corporation (NASDAQ:COST) reported $62 billion in revenue, reflecting a 7.5% increase from the previous year. Net income grew to $1.8 billion, up from $1.6 billion in the prior year. The company maintained a strong cash position, ending the quarter with nearly $11 billion in cash and equivalents, an increase from $9.9 billion in the previous quarter. In addition, it generated $3.3 billion in operating cash flow.
Analysts remain positive about Costco Wholesale Corporation (NASDAQ:COST)’s future, highlighting its ability to outpace competitors by steadily growing its market share and benefiting from its retail-as-a-service approach, which provides reliable membership income. The company’s advantage comes from its membership-based pricing and bulk discount model, which has fostered a loyal and growing customer base worldwide, as seen in its most recent quarterly results.
Costco Wholesale Corporation (NASDAQ:COST) is also one of the most reliable dividend payers, having raised its payouts for 20 consecutive years. Its quarterly dividend comes in at $1.16 per share and has a dividend yield of 0.51%, as of March 23.
3. UnitedHealth Group Incorporated (NYSE:UNH)
Analysts Upside Potential: 21.8%
UnitedHealth Group Incorporated (NYSE:UNH) is an American health insurance company. Its diverse business model, which includes health insurance, pharmacy benefits management, and healthcare services, positions it for sustained growth. This integrated approach strengthens cross-selling opportunities and improves the efficiency of care delivery. The stock has surged by nearly 3% since the start of 2025.
Analysts highlighted the company’s success in reducing its operating cost ratio, thanks to strategic portfolio adjustments, which support long-term profitability. In 2024, the ratio declined to 13.2% from 14.7% in the previous year.
For fiscal 2024, UnitedHealth Group Incorporated (NYSE:UNH) exceeded investor expectations, with revenue rising 8% to $400 billion, driven by growth across its service segments. Operating earnings reached $32.3 billion, but after adjusting for cyberattack-related expenses and challenges in South America, adjusted earnings stood at $34.4 billion.
UnitedHealth Group Incorporated (NYSE:UNH) maintained strong cash flow, aligning with investor expectations. It generated $24.2 billion in operating cash flow, equivalent to 1.6 times its net income. Over the year, the company returned more than $16 billion to shareholders through dividends and stock buybacks. In the fourth quarter, the return on equity was 23.7%, underscoring its solid earnings performance and effective capital management. It offers a quarterly dividend of $2.10 per share and has a dividend yield of 1.63%, as of March 23. It is one of the best Roth IRA stocks on our list as the company has been making regular payments since 2010.
2. NextEra Energy, Inc. (NYSE:NEE)
Analysts Upside Potential: 22.7%
NextEra Energy, Inc. (NYSE:NEE) is an American renewable company, headquartered in Florida. The company mainly generates, transmits, and sells electricity. It benefits from two key growth drivers. The company operates Florida Power & Light (FPL), the largest electric utility in Florida, which gains from the state’s ample sunshine and steady population growth. In addition, its energy resources division, a leading developer and operator of renewable energy, is capitalizing on increasing demand and declining costs.
Beyond its core utility business, NextEra Energy, Inc. (NYSE:NEE) generates stable cash flow from its clean energy segment, which operates under long-term contracts. With the growing shift toward renewables, the company is rapidly expanding this division. Management aims to boost its renewable energy capacity from 36 gigawatts to 46.5 gigawatts by 2027, potentially doubling the business in the coming years.
On February 14, NextEra Energy, Inc. (NYSE:NEE) announced a 14% increase in its quarterly dividend to $0.5665 per share, marking 29 consecutive years of dividend growth and reinforcing its status as a top dividend aristocrat. These payouts are backed by strong cash flow, with the company generating over $13.2 billion in operating cash flow in fiscal 2024. Looking ahead, it plans to raise its dividend per share by around 10% annually through at least 2026, using its 2024 distribution as the baseline. As of March 23, the stock has a dividend yield of 3.2%.
1. Microsoft Corporation (NASDAQ:MSFT)
Analysts Upside Potential: 30.7%
Microsoft Corporation (NASDAQ:MSFT) is an American multinational tech giant that focuses on developing and marketing software, services, and hardware designed to create new opportunities, improve convenience, and add value to everyday life.
Recently, Microsoft Corporation (NASDAQ:MSFT) announced a ZAR 5.4 billion investment to expand cloud and AI infrastructure in South Africa, highlighting its commitment to digital transformation in emerging markets. This follows its earlier ZAR 20.4 billion investment in local data centers, aimed at improving cloud accessibility for businesses, government agencies, and startups.
In Q2 2025, Microsoft Corporation (NASDAQ:MSFT) reported $69.6 billion in revenue, reflecting a 12% year-over-year increase, while net income grew 10% to $24.1 billion. The company’s strong performance was fueled by a 21% rise in cloud revenue, though Azure’s growth continues to face some challenges. Meanwhile, AI services revenue skyrocketed by 157%, surpassing expectations. Microsoft remains financially strong, generating $22.2 billion in operating cash flow and closing the quarter with $17.4 billion in cash and cash equivalents. Additionally, it returned $9.5 billion to shareholders through dividends and stock buybacks.
On March 11, Microsoft Corporation (NASDAQ:MSFT) declared a quarterly dividend of $0.83 per share, which was in line with its previous dividend. Overall, the company maintains a 19-year streak of consistent dividend growth, which places it on our list of the best Roth IRA stocks. As of March 23, the stock has a dividend yield of 0.85%.
Overall, Microsoft Corporation (NASDAQ:MSFT) ranks first on our list of the best Roth IRA stocks according to analysts. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than MSFT but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
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