With consumer price inflation, as measured by the Consumer Price Index, running at 2% year-over-year and 10 year treasury yields at 1.6%, investors cannot even keep up with inflation by investing in treasury bonds. Therefore, many have turned to dividend paying stocks to help keep up with rising prices. This can be a good strategy and I have been recommending many dividend growth stocks such as Coca-Cola (KO), Johnson & Johnson (JNJ), Wal-Mart (WMT), Exxon (XOM), and Procter & Gamble (PG) for a long time.

Eli Lilly’s (LLY) stock price has risen by over 20% over the past six months. This has been good news for those who already own the stock, but to those looking to buy more in order to take advantage of their hefty dividend yield, this is actually bad news. Six months ago the dividend yield was 5%. Now it sits at only 3.9% due to the increase in the stock price.

I spend a lot of time helping people understand how much money they will need to meet their retirement goals. Today I want to look at this another way: What will $1 million actually get you in retirement? This is an interesting question because a) Many people believe that $1 million is a comfortable amount to meet their retirement goals and b) We can look at the different ways in which a couple can use this $1 million without running out of money.

When looking to build a long-term portfolio of stocks that pay high dividends, investors usually come up with a mix of stocks that either have high dividend yields or high dividend growth rates. It is difficult to find good companies that have both.

When investing in Real Estate Investment Trusts (REITs) investors are sometimes surprised by the hefty tax bill. REITs are taxed at ordinary income tax rates if they are in taxable accounts, which takes a big bite out of the total return for many. But there is a way to get around this tax bill if an investor has capital losses he can use. I call this strategy dividends to capital gains conversion.