We recently published a list of 10 Best Roth IRA Stocks to Buy According to Analysts. In this article, we are going to take a look at where Union Pacific Corporation (NYSE:UNP) stands against other best Roth IRA stocks to buy according to analysts.

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.

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).

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.

Overall, UNP ranks 6th on our list of best Roth IRA stocks to buy according to analysts. While we acknowledge the potential of UNP 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 UNP 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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Disclosure: None. This article is originally published at Insider Monkey.