Summary
A defensive ~$30k income portfolio built from Dividend Hunter recommendations, designed to hold up better in market corrections than the max-income variant. Trades yield for ballast: drops the cyclical/credit-heavy names (STWD, NXG, MRP, MSIF, KRP) and adds preferreds (PFFA), bonds (BNDS), and stable BDCs (HTGC, CSWC).
Headline numbers (priced 2026-10-04):
- Invested: $30,339
- Projected annual income: ~$3,576 (11.8% blended yield, ~$298/mo)
- Bear-market drawdown est.: −22% vs −30% for the income variant
- Credit-stress income loss est.: −20% vs −35% for the income variant
Construction Logic
Goal: best income with materially better correction behavior than the October 2026 portfolio snapshot average.
Removed from the income build (cyclical / credit / leverage tail):
- STWD — mortgage REIT; deepest dividend-cut risk in a credit event (−45% modeled)
- NXG — leveraged energy CEF; leverage amplifies drawdown
- MRP — homesite REIT; housing is the cyclical that gets hit in slowdowns
- MSIF — BDC at 88% debt-to-NAV; credit-sensitive
- KRP — commodity royalties; commodity beta
Added / weighted up (ballast):
- PFFA — preferred stock ETF; stable fixed income, 10.5% yield (see Preferred Stock Primer)
- BNDS — bond income, lowest modeled drawdown (−6%)
- HTGC + CSWC — stable BDCs (HTGC is a Start Out Portfolio holding), lower-beta income
- AMZA — midstream; steady, less volatile than commodity-royalty exposure
Covered-call sleeve retained — KQQQ, KCOP, QVOL — options income buffers ~10 pts of downside while keeping solid yields (12.3%–16.5%).
Holdings (priced 2026-10-04, live quotes)
| Ticker |
Cost |
Shares |
Yield |
Annual income |
Role |
| KQQQ |
$3,985 |
134 |
16.5% |
$658 |
Covered-call growth engine |
| PFFA |
$3,994 |
202 |
10.5% |
$419 |
Preferred ballast |
| KCOP |
$3,490 |
151 |
15.6% |
$544 |
Covered call |
| BNDS |
$3,458 |
71 |
8.3% |
$287 |
Bond ballast |
| QVOL |
$2,954 |
29 |
12.3% |
$363 |
Vol-premium covered call |
| HTGC |
$2,996 |
179 |
9.6% |
$288 |
Stable BDC |
| CSWC |
$2,493 |
106 |
9.9% |
$247 |
Stable BDC |
| AMZA |
$2,493 |
52 |
8.5% |
$212 |
Midstream income |
| FSCO |
$2,499 |
489 |
13.7% |
$342 |
Small credit position (deep NAV discount) |
| ICAP |
$1,977 |
72 |
10.9% |
$216 |
Trimmed leveraged equity CEF |
Totals: $30,339 invested · $3,576/yr projected · 11.8% blended · ~$298/mo
Correction Stress Model
Position-level drawdown estimates by scenario (modeling assumptions, not predictions):
| Scenario |
Income variant |
Defensive variant |
Income stream impact (defensive) |
| Moderate correction (SPX −10%) |
−15.7% |
−11.9% |
−3% (est. $3,469/yr) |
| Bear market (SPX −25%) |
−29.7% |
−22.1% |
−10% (est. $3,218/yr) |
| Credit stress (2026-style) |
−27.1% |
−19.7% |
−20% (est. $2,861/yr) |
Key result: the defensive variant cuts bear-market drawdown by ~8 points and — more importantly — reduces credit-stress income risk from −35% to −20%, because the credit-sensitive names (STWD, MSIF) are gone.
Why the residual weakness remains:
- FSCO kept at $2.5k — still credit, but at a 26% NAV discount it's the "already marked down" entry point; can widen to 36% under fear (the early-2026 precedent)
- Covered-call sleeve still carries equity beta — it bleeds, just less
- ICAP still has 15–30% leverage, just smaller
Yield-On-Pain: Why This Still Works as an Income Port
After a bear-market drawdown the model shows yield on remaining capital rising to ~13.6% — the DH thesis in action: price falls, dividends keep landing, reinvesting at higher yields accelerates income growth. A year like 2026 has been the live proof point (see September 2026 issue: July tech selloff, account kept gaining).
Tradeoff vs Max-Income Variant
| Metric |
Income port |
Defensive port |
| Invested |
~$30,347 |
~$30,339 |
| Annual income |
~$4,155 (13.7%) |
~$3,576 (11.8%) |
| Monthly |
~$346 |
~$298 |
| Bear drawdown |
−29.7% |
−22.1% |
| Credit income-at-risk |
−35% |
−20% |
You give up ~$48/mo (~$580/yr) for ~8 points less drawdown and roughly half the credit income risk. For a $30k allocation that's a reasonable insurance premium if capital preservation matters; if pure income is the only goal, the income variant is the pick.
Gaps / Watch Items
- Yields computed from DH-reported rates at 2026-10-04 prices; several holdings (MAIN, SFL, AMZA, PFFA) were last reviewed mid-2025 — actual yields may have drifted
- MRP excluded here, but its dividend is growing $0.01/quarter — if housing stabilizes it's a candidate to re-add for yield
- This is research, not financial advice; verify current yields and dividend health before deploying