Getting a Tax Refund? 3 Exciting Stocks to Buy With Your Refund Check.

Matt DiLallo, Neha Chamaria, and Reuben Gregg Brewer, The Motley Fool

Sun, Mar 9, 2025, 7:46 AM 6 min read

The Internal Revenue Service (IRS) has already processed more than 29.6 million tax refunds this year, up 2.3% from last year. The average taxpayer is getting $3,453 apiece, a 7.5% increase from last year. If you're one of those getting a refund this year, you might be wondering what to do with your windfall.

Investing it is a great option. Black Hills (NYSE: BKH), Targa Resources (NYSE: TRGP), and Enterprise Products Partners (NYSE: EPD) stand out to a few Fool.com contributors as exciting stocks to consider buying with your tax refund. Here's what makes them such thrilling investments.

Reuben Gregg Brewer (Black Hills): It would be understandable for investors to question if there was anything exciting about a regulated utility like Black Hills. There is. First is the dividend, which at 4.4% is well above the 1.2% yield from the broader market, greater than the 2.9% yield of the average utility, and historically high for Black Hills. Black Hills also happens to be one of the few utilities to achieve Dividend King status, with 55 annual dividend increases backing its lofty yield.

There's more. The company announced a new five-year capital investment plan that is 10% larger than the last plan. This represents a solid runway for future growth that's pretty much baked in. Within that plan is the expectation for 500 gigawatts in additional demand from data centers. Data center demand is expected to be 1 gigawatt over time, but the larger estimate extends beyond the five-year plan window. By 2028, however, data centers are expected to represent 10% of Black Hills' earnings.

A key part of the growth Black Hills expects relates back to a fundamental fact about the regions where it operates -- mostly the Midwest. The utility's customer base is growing nearly three times faster than the U.S. population! This is a well-situated utility that's expecting earnings growth to tick up from 4% a year to roughly 5% a year, on average. Don't belittle that change. It's a 25% increase in the company's growth rate. And that is very exciting for a company that most would view as boring.

Matt DiLallo (Targa Resources): Targa Resources has taken its investors on an exciting run since the start of last year. The midstream energy company's stock price has more than doubled during that period. Fueling that surge has been its growing earnings and cash returns to shareholders.

This pipeline company is coming off a record year. Targa reported record Permian, NGL transportation, fractionation, and LPG export volumes last year, fueled by strong market conditions and the benefit of completing several organic expansion projects. Those strong volumes helped power a 17% increase in its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to a record $4.1 billion. That surging earnings enabled Targa to repurchase a record $755 million of its stock. The company also increased its dividend by 50% last year.