Your Tax Refund Will Probably Be Bigger This Year. Here's What to Do With It.

By Matthew Benjamin – Mar 16, 2026 at 12:30PM ESTKey PointsConsumer staples, healthcare, and utilities are all defensive sectors. These stocks tend to outperform the broader market in tough times.Due to the "big, beautiful bill" passed last year, many taxpayers can expect a larger refund from the Internal Revenue Service this tax season. That's because the bill reduced individual taxes by $129 billion for 2025. But many Americans didn't change their withholding for the year, so they'll get back the extra amounts withheld from their paychecks in their tax returns. As of late February, the average refund is a bit more than 10% higher so far this year, pushing the average refund amount for individual filers from around $3,450 to more than $3,800. Unless you have urgent spending needs or you can pay down expensive debt, the wisest thing to do with that refund is to invest it and give your retirement portfolio a bit of a shot in the arm. But in such uncertain times, when the war in the Middle East is pushing major stock indexes down and driving market volatility higher -- with no clear end to the conflict in sight -- it's difficult to know where to invest. Image source: Getty Images. Certain sectors are less impacted by volatility or economic slowdowns Fortunately, there are prudent investments that should outperform other assets in volatile or down markets. And if you look at a heat map of the S&P 500, you can see that many of these stocks are already outperforming the broader market over the past month as the war has ground on. First of all, consider stocks of companies that provide essential goods that people won't stop buying even if the economy stagnates or inflation rises. The consumer staples sector includes discount retailers like Costco Wholesale (COST 0.74%), Target (TGT +0.22%), and Walmart (WMT 0.96%). People will continue to shop at these low-cost chains even when the economy falters. Even better, higher-income consumers looking to cut costs in tough times will increase their visits to these stores. ExpandNASDAQ: COSTCostco WholesaleToday's Change(-0.74%) $-7.43Current Price$1001.00Key Data PointsMarket Cap$447BDay's Range$995.43 - $1012.6552wk Range$844.06 - $1067.08Volume684KAvg Vol2.5MGross Margin12.93%Dividend Yield0.52% Healthcare is another great defensive sector. I like Johnson & Johnson (JNJ +0.44%) and CVS (CVS +0.18%) -- they provide essential medical supplies or services that people will need in good times and bad. Healthcare is not a luxury. And utilities are always a great bet if you think the market and/or economy is about to turn downward, as they provide essential services that don't see a decline in demand in recessions. Three top utilities to consider are American Water Works (AWK 0.38%), a water utility; Brookfield Infrastructure (BIPC 0.85%), a gas utility; and NextEra Energy (NEE +0.21%), an electric utility. ExpandNYSE: NEENextEra EnergyToday's Change(0.21%) $0.20Current Price$92.98Key Data PointsMarket Cap$193BDay's Range$92.24 - $94.4452wk Range$61.72 - $95.91Volume4.2MAvg Vol9.7MGross Margin36.20%Dividend Yield2.50% Those are just a few safe, reliable investments to make when the rest of the market looks a bit iffy, as it does right now.Read NextJan 28, 2026 •By Selena MaranjianThis Could Be One of the Best Retail Stocks to Hold for the Next 10 YearsJan 22, 2026 •By Selena MaranjianThis Potential Stock-Split Stock Could Make You RichJan 6, 2026 •By William DahlWarren Buffett's Partner, Charlie Munger, Put Almost All His Money Into 3 Investments: Here's How They're Doing NowAug 28, 2025 •By Selena MaranjianPrediction: These 3 Stocks Will Be Worth More Than Tesla 10 Years From NowApr 15, 2025 •By Selena MaranjianPrediction: 3 Stocks That'll Be Worth More Than Costco 10 Years From NowOct 23, 2024 •By Selena Maranjian5 Monster Stocks to Hold for the Next 5 to 25 YearsAbout the AuthorMatthew Benjamin is a contributing Motley Fool stock market and investing analyst covering publicly-traded companies across all sectors. Prior to The Motley Fool, Matt was a senior markets expert at an investing newsletter in Baltimore, an editorial consultant to the World Bank and the International Monetary Fund (IMF), and an economics correspondent at Bloomberg News. He holds a B.A. from Bucknell University and an M.A. from New York University. Fun fact: Matt has met every Federal Reserve Chair from Paul Volcker through Jerome Powell.TMFMbenjamin68Stocks MentionedCostco WholesaleNASDAQ: COST$1,002.15(-0.62%)-$6.28Johnson & JohnsonNYSE: JNJ$242.58(+0.44%)+$1.06WalmartNASDAQ: WMT$125.36(-0.92%)-$1.16TargetNYSE: TGT$117.53(+0.16%)+$0.19CVS HealthNYSE: CVS$76.23(+0.13%)+$0.10NextEra EnergyNYSE: NEE$92.98(+0.21%)+$0.20American Water WorksNYSE: AWK$139.25(-0.32%)-$0.44Brookfield InfrastructureNYSE: BIPC$46.39(-0.92%)-$0.43*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.