GLAD (9.52%) and LIEN (13.4%) pay ordinary dividends taxed at full marginal rates, saving $9,600 annually inside a Roth at the 24% bracket.
GOOD and SHIP also distribute ordinary income, and at the 37% bracket the annual Roth advantage on $40,000 in gross dividends reaches $14,800.
Reinvested dividends inside a Roth escape ordinary-rate taxation, pushing the 10-year advantage on a single $500K position to $96,000 without price appreciation.
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At the 24% federal bracket, a portfolio kicking off $50,000 in ordinary dividend income hands roughly $12,000 to the IRS every year, before state taxes touch it. BDCs, net-lease REITs, and foreign shipping names distribute the bulk of their income as ordinary (non-qualified) dividends, so that annual tax drag never softens. It repeats every distribution cycle, forever.
The five names below all fall into that category, which is exactly why they belong in the Roth conversation.
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Gladstone Capital (NASDAQ:GLAD) yields 9.52% at $19.48 per share, paying monthly. The lower middle market BDC raised its distribution to $0.18 per share on the September ex-date, with a $2.16 forward annualized figure. BDC payouts are ordinary income.
Gladstone Investment (NASDAQ:GAIN): 5.98% base yield at $15.90, plus periodic supplemental capital-gains distributions. The most recent supplemental was $0.54 per share on the June 2025 ex-date.
Chicago Atlantic BDC (NASDAQ:LIEN): 13.4% yield at $10.14. Quarterly $0.34 dividend, portfolio gross weighted-average yield of 15.8%, zero non-accruals, 100% senior secured.
Gladstone Commercial (NASDAQ:GOOD): 9.39% yield at $12.71. Monthly $0.10 distribution from a net-lease REIT, taxed as ordinary income under Section 199A pass-through rules.
Seanergy Maritime (NASDAQ:SHIP): 4.82% trailing yield at $18.41, with a variable quarterly dividend tied to Capesize freight rates. The latest declaration lifted to $0.35 per share. Marshall Islands domicile means U.S. holders receive ordinary treatment.
Take a $500,000 position in a stock or blended basket yielding 8%. That generates $40,000 in gross dividend income annually. Held in a taxable brokerage account at the 24% bracket, the after-tax figure drops to $30,400 after $9,600 goes to the IRS. Held inside a Roth IRA, the full $40,000 stays.
Annual Roth advantage: $9,600. Straight-line 10-year Roth advantage on this one position, without any reinvestment or price appreciation: $96,000.
The higher your marginal rate, the more urgent the Roth placement decision becomes. Applied to the same $40,000 gross:
The 24% bracket applies to single filers with taxable income between $103,351 and $197,300 in 2025, and the 37% top rate begins above $626,350. Married filing jointly, the 24% band runs $206,701 to $394,600.
Inside a Roth, that $9,600 gets reinvested and produces its own dividends, which get reinvested again, without a single dollar of tax friction along the way. In a taxable account, each year's dividend and each year's reinvested dividend gets taxed at ordinary rates before it can compound. Over 10 and 20 years, the gap runs into multiples of the annual figure, and the higher your bracket, the wider it opens. (The cheapest years to move ordinary-income assets into a Roth are usually the quiet ones between your last paycheck and your first RMD, which is the whole subject of our free Roth conversion guide: here.)
For context, the 10-year Treasury yields 4.95%, so the ordinary-dividend spread these names offer above the risk-free rate is meaningful only if you actually keep it.
If you hold GLAD, GAIN, LIEN, GOOD, SHIP, or any other BDC, REIT, or foreign shipping name in a taxable account, calculate your annual tax cost at your bracket before your next tax filing.
Run the Roth conversion math on the specific ordinary-dividend positions above before assuming the up-front conversion tax outweighs the recurring annual delta.
If a phased conversion is on the table, start with the highest-yielding ordinary-dividend names in your book, where the annual tax drag per dollar invested is largest.
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