Altria Group Inc (MO), BP plc (ADR) (BP): Enjoy Years Of Tax-Free Dividends

Investors are constantly under a deluge of financial advice. With so many options and different types of investment vehicles and strategies, it’s no wonder most individuals feel overwhelmed by the prospect of retirement saving. However, planning for one’s financial future is a pivotal task, the importance of which cannot be understated.

One option nearly all investors would be wise to take advantage of is the Roth Individual Retirement Account (IRA), which allows a person to contribute money each year, albeit not deductible from one’s taxes, that will grow tax-free until retirement.

In that vein, since all capital gains and dividends are tax-free within a Roth, it’s generally advisable to keep high dividend stocks in a Roth. With that in mind, here are some great candidates for a Roth IRA.

Enjoy years of tax-free dividends

Some of the market’s best blue-chip stocks pay dividend yields nearing 5%. While interest rates are at historic lows and the markets keep surging to new highs, it’s still possible to capture high dividend yields without resorting to speculative companies you’ve never heard of.

Several well-known and well-managed businesses, including Altria Group Inc (NYSE:MO) and Lockheed Martin Corporation (NYSE:LMT) pay dividend yields very close to 5% annualized.

Tobacco king Altria Group Inc (NYSE:MO) is the gold-standard for dividend-paying stocks and maintains a stable of well-known products that cater to our vices. Its tobacco offerings include Philip Morris USA, which holds the juggernaut Marlboro brand. Through its acquisition of UST Inc., Altria Group Inc (NYSE:MO) has smokeless tobacco offerings including the Skoal and Copenhagen brands. Altria Group Inc (NYSE:MO) also owns Ste. Michelle Wine Estates, John Middleton cigars, and a stake in brewing company SAB Miller.

Defense giant Lockheed Martin Corporation (NYSE:LMT) produces prodigious free cash flow, which it uses to generously reward shareholders with share buybacks and rising dividends. While you might be reluctant to allocate capital to the defense industry in the middle of the ongoing sequester, it’s worth noting that the reality of the world we live in is that governments are constantly encountered with new security challenges.

Despite possible budget cuts to defense, Lockheed Martin Corporation (NYSE:LMT) expects its operating margin to remain stable going forward, and it continues to be committed to returning at least 50% of free cash flows to investors through dividends and share repurchases. Lockheed Martin Corporation (NYSE:LMT) has increased its dividend by more than 22% annually over the last five years.