All Holdings - Earnout Investor Income Barricade Portfolio
Income Ladder and 10-Year Projection
Asset Allocation for thee Earnout Investor Income Barricade Portfolio
The Problem With How People Think About Income
There is a version of income investing that shows up constantly in financial media. Buy high-yield stocks. Collect big dividends. Retire on the checks. It sounds simple because it is presented simply. It is also, in the way it is usually practiced, a wealth destruction strategy dressed up as a wealth preservation one.
Here is the pattern I see repeated constantly. An investor in their late 50s decides it is time to "play it safe." They rotate out of growth and into yield. They chase the highest dividend percentages they can find - 8%, 9%, sometimes 11%. They feel secure. The income is coming in monthly.
Then one of three things happens. Either the company cuts the dividend because the payout was never sustainable, or the stock price erodes slowly because the business is shrinking and the dividend was being funded by capital rather than earnings, or both at once. The investor ends up with less income than they started with and a portfolio worth 30% less than when they made the "safe" move.
The Income Barricade is built around a different question entirely. Not where is the highest yield? But rather - where is the most reliable and growing income, and what combination of assets produces that income with the least possible risk of permanent capital loss?
Those are not the same question and the difference in outcomes is massive.
What This Portfolio Is
The Income Barricade is a $100,000 model portfolio built across 24 positions in 9 distinct categories. The target total return is 9-12% annually, composed of a 4.85% current yield plus 4-7% in price appreciation.
The current Sortino ratio is 1.47. The S&P 500's is 0.78.
I want to dwell on that number for a moment because it is the most important number in this portfolio. The Sortino ratio measures return relative to downside risk specifically - not total volatility, but the volatility that actually hurts you, which is losses. A Sortino of 1.47 means that for every 1% of downside risk this portfolio accepts, it generates 1.47% of excess return. The S&P 500 generates 0.78% per unit of downside risk. This portfolio generates nearly twice as much income per unit of the risk that actually matters.
The Sharpe ratio is 0.73 against approximately 0.52 for SPY. The portfolio beta is 0.42, meaning when the S&P 500 falls 20%, this portfolio is designed to fall roughly 8-9%. The maximum drawdown target is 12% versus approximately 24% for the S&P 500 in a severe downturn.
The portfolio currently generates an estimated $4,850 in annual income on a $100,000 investment, or roughly $404 per month.
That income grows approximately 5.2% per year from the dividend growth positions inside it, meaning a $100,000 investment today is projected to generate approximately $7,742 annually by 2035, while the portfolio itself should be worth somewhere between $140,000 and $160,000 during the same period.
As a portfolio this is designed to be an income machine with a compounding engine inside it.
The Architecture. 9 Categories, One Coherent Idea
The core of the portfolio is the Dividend Aristocrats sleeve at 24%.
Dividend Aristocrats are companies that have raised their dividends for 25 or more consecutive years. Johnson & Johnson has done it for 62 years. Procter & Gamble for 68. These streaks did not happen by accident. They represent businesses with such durable competitive advantages including healthcare monopolies, consumer brand portfolios, payment network monopolies, etc. Their common trait is that they generate cash regardless of what the economy is doing. The Great Financial Crisis, the COVID pandemic, the 2022 inflation shock: all of those appear as minor blips in these companies' dividend growth histories.
More importantly, the average payout ratio across this sleeve is 41%. These companies pay out less than half their earnings as dividends. There is no realistic scenario under which a well-run company with a 41% payout ratio and a 25-year growth streak cuts its dividend. The cushion is structural.
Then there is the bond allocation at 15%.
I want to address the instinct many investors currently have to avoid bonds. That instinct made sense from 2010 to 2021, when yields were near zero and bonds were purely a drag on returns.
In March 2026, investment grade corporate bonds yield 4.5-4.8%. That is real income, the highest in 15 years. It also means that when the Fed cuts rates in September, which currently carries a 72% market-implied probability, bond prices rise 4-8% on top of the coupon. In this rate environment, bonds are both an income source and a capital appreciation opportunity. That is not the case most of the time, but right now it is.
The short duration and cash allocation at 12% is a feature of the design.
Most investors who run income portfolios are fully invested at all times. This means when Realty Income drops 12% on a bad jobs report, or when a utility sells off because of a hawkish Fed comment, they can watch it happen and do nothing. The 12% in T-bills earning 4.4% ensures this portfolio always has the ability to act on dislocations rather than suffer through them. In the meantime, the cash earns more than most savings accounts, with daily liquidity.
The REIT sleeve at 14% is where this portfolio captures inflation pass-through in a way most income portfolios miss entirely.
Realty Income holds 15,500 properties under triple-net leases, meaning tenants pay taxes, insurance, and maintenance. VICI Properties holds the land under MGM Grand and Caesars Palace under 30-year leases with annual CPI-linked rent escalators. American Tower owns 225,000 cell towers globally and raises rents 3-5% every year regardless of vacancy. These structures convert inflation from an enemy into a mechanism that increases the income stream.
Covered call ETFs at 10% - JEPI and JEPQ are the most sophisticated instruments in the portfolio, and the ones most commonly misunderstood.
Both hold broad equity market portfolios and sell covered call options against them monthly, collecting the option premium as distributable income. The result is 8.5-9.2% annual yield paid monthly.
The tradeoff is that your upside is capped near the call strike. In a ripping bull market, these will underperform simple index funds. But for an investor who already holds a growth-oriented portfolio separately, that tradeoff is precisely the right one. You are getting equity market exposure with 8.5% income and half the volatility of the underlying index.
The remaining sleeves - MLPs at 7%, TIPS at 5%, preferred securities at 5% - each fill a specific structural role. Enbridge and Enterprise Products Partners own pipeline infrastructure under long-term inflation-indexed contracts. ENB's 7.2% yield has been raised for 28 consecutive years under exactly the kind of geopolitical and commodity market volatility we are currently experiencing.
TIPS provide insurance against inflation re-acceleration and real yields at 1.68% are the most attractive they have been in a decade. Preferred securities fill the gap between bonds and equities, paying 6.5% fixed distributions that are contractually senior to common equity dividends.
What Could Go Wrong
REITs are rate-sensitive. If the Fed does not cut in September, or if Warsh signals a hawkish pivot at his first FOMC press conference, REIT valuations will face pressure.
The income will still arrive as the leases are not broken by interest rate changes - but the market price of the holdings will be lower. Anyone using this portfolio needs to distinguish between income impairment and price volatility. A Realty Income position that drops 8% in price while continuing to pay its monthly dividend should be viewed as an opportunity to reinvest at a higher yield.
MLP distributions carry tax complexity. Enbridge and Enterprise Products Partners issue K-1 forms, not 1099s. For accounts held at many brokerages, this creates filing complexity and potential state tax issues. For tax-advantaged accounts such as IRAs, this problem largely disappears. If you run this portfolio in a taxable account, the MLP sleeve warrants a conversation with a tax professional.
Covered call ETFs cap upside. In the bull scenario where equity markets run 20%+ in 2026, JEPI and JEPQ will meaningfully underperform pure equity exposure. This is a known and accepted design limitation. If 2026 becomes a ripping bull market, the Income Barricade will earn 12-15% total return while the Alpha Growth Portfolio earns 24-30%. That outcome is fine. The two portfolios are designed to complement each other, not to compete.
The dividend aristocrats are not immune to drawdowns. In March 2020, JNJ fell 22%, PG fell 16%, and KO fell 28% before recovering fully within 12 months. Capital preservation means smaller losses than the broad market, faster recovery, and uninterrupted income throughout. It does not mean zero price decline in a crisis.
The Income Ladder
What makes this portfolio genuinely different from a high-yield trap is not the current yield. It is what that yield becomes over time.
The portfolio pays $4,850 today. Through dividend growth reinvestment, that figure rises to approximately $5,950 by 2030 and $7,742 by 2035, at which point it represents a 7.74% yield on the original $100,000 investment. The cumulative income received over 10 years, without reinvestment, exceeds $68,000. With reinvestment, it is substantially higher.
This is the compounding income dynamic that separates dividend growth investing from yield chasing. A 7% yielding stock that never raises its dividend will still be paying you 7% on your original cost in Year 10, in nominal dollars worth less due to inflation. A 3.5% yielder growing at 10% annually pays you 9% on original cost in Year 10, in an income stream that has kept pace with or exceeded inflation. The math is not subtle.
The Income Barricade is built primarily around the second category.
Why I'm Publishing This
The Alpha Growth Portfolio gets the attention because it has the dramatic numbers - the NVIDIA thesis, the China rotation, the speculative sleeve. The Income Barricade is the portfolio that is strong and steady, producing cash and compounding.
Most investors who take concentrated growth positions do so without any structural protection underneath them. When those positions go wrong,the response is panic, forced selling at the bottom, and permanent capital impairment.
The Income Barricade exists to prevent that outcome. It pays you $400 a month while you wait for dislocations to resolve. It falls half as much as the market in crashes. It recovers in six to nine months from yield alone while the growth portfolio is still finding its footing.
Every month I will update both portfolios side by side. Income changes, dividend increases, position adjustments, and the reasoning behind each one.
More to come.
The Earnout Investor provides analysis and research but DOES NOT provide individual financial advice. Jamie Dejter may have a position in some of the stocks mentioned. All content is for informational purposes only. The Earnout Investor is not a registered investment, legal, or tax advisor, or a broker/dealer. Trading any asset involves risk and could result in significant capital losses. Please, do your own research before acquiring stocks.