Scott listed his top picks.
Municipal bonds are an asset most investors are familiar with and Scott suggested buying the BlackRock Long-Term Municipal Advantage Trust (BTA) - Get Blackrock Long-Term Municipal Advantage Trust Report.
The fund boasts a 6.3% dividend yield and while it's not as liquid as some other muni bond funds, it has superior performance and 99% earnings coverage.
While its earnings coverage is above average, the fund also boasts moderate to low leverage, Scott said. Even better, 93% of its portfolio is made up of investment grade bonds.
Many MLPs have been sold off along with other energy stocks, but for the most part, the pipeline business is unaffected by oil prices. That makes the group attractive and specifically, the JMF fund looks good with its 7% yield and superior performance to its peers, Scott said.
BDCs, or business development companies operate with more leverage and issue private loans, Scott explained.
Medley Capital (MCC) - Get Medley Capital Corporation Report is one way investors can gain exposure to BDCs. The fund pays a yield of nearly 13% and has about two-thirds of first lien loans, which include borrowings such as a mortgage.
First lien loans are the good loans to issue, Scott reasoned, adding that about three-quarters of these loans are done on variable rates, meaning they will benefit from an eventual rise in interest rates.
Finally, he also likes the Eaton Vance Tax-Managed Diversified Equity Income Fund (ETY) - Get Eaton Vance Tax-Managed Diversified Equity Income Fund Report. It pays an attractive dividend yield of 8.8%, has below-market volatility, and investors don't have to worry about bond durations.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.