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

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.

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Black Hills is putting more into growth

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.

BKH Dividend Yield data by YCharts.

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.

High-octane returns

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.

Targa Resources expects that 2025 will be another record-setting year. The company anticipates its adjusted EBITDA will rise another 15% this year. It will benefit from completing a couple more expansion projects and the accretion from repurchasing all the outstanding preferred equity in Targa Badlands. That growth should enable Targa to return even more cash to its shareholders. It already revealed another 33% increase in its dividend and has ample capacity to repurchase more shares.

The company's growth engine has plenty more fuel coming down the pipeline. Targa recently announced several new expansion projects that will fuel growth in the coming years when they come online. Meanwhile, given the expected surge in natural gas to support accelerating power demand, the company should be able to continue growing at a healthy clip. That growth could give Targa's stock more fuel to continue its exciting run.

Steady growth, big dividends

Neha Chamaria (Enterprise Products Partners): What could be exciting about a boring midstream energy stock? It crushed the S&P 500 over the past year, has a strong growth visibility for 2025 and beyond, and wants to reward its shareholders with bigger dividends every year. That's why Enterprise Products Partners is one stock you could buy with your tax refund check.

Enterprise Products is gearing up for a big year ahead as it plans to put nearly $6 billion of its ongoing $7.6 billion capital-project backlog into service. That should mean two good things for the company. First, the new projects should start contributing to Enterprise Products' cash flows. Second, with its capital expenditures expected to taper from 2026 onward, the company should have more cash at its disposal to reinvest into growth, repay debt, or distribute among its shareholders.

The pipeline company is already coming off a strong fiscal year. Its net income grew 7% while distributable cash flow (DCF) rose 4%, both hitting record highs in 2024. The company increased its dividend by 5% last year. Importantly, Enterprise Products' DCF comfortably covered its dividends by 1.7 times and still had $3.2 billion in DCF left after increasing its dividend. That's a solid dividend profile for any company, especially one that belongs to a volatile sector like energy.

That's the thing, though. Although Enterprise Products is an energy company, its pipelines business earnings come from fee-based, long-term contracts. That insulates the company's cash flows from the volatility in oil and gas prices to a large extent, allowing it to invest regularly in growth while distributing bigger dividends year after year. With the stock also offering a juicy yield of 6.4%, Enterprise Products is a top stock to buy.

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Matt DiLallo has positions in Enterprise Products Partners. Neha Chamaria has no position in any of the stocks mentioned. Reuben Gregg Brewer has positions in Black Hills. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.