Saving money amid inflation is difficult. But there is one way millions of Americans could be getting at least a one-time boost to their finances this year, and that's through an income tax refund. Many Americans are planning to save that money. But one way you can stretch that money even further is by investing it.
While stocks may not seem like the safest places to put your money during the current bear market, there are a couple of relatively low-risk options to consider that can help set you up for some great gains in the future: Eli Lilly (LLY 1.19%) and Apple (AAPL -0.35%).
1. Eli Lilly
One stock that could make the most of your investment is healthcare giant Eli Lilly. It pays a modest dividend yield of 1.2%, which is below the S&P 500 average of 1.7% and it may seem expensive, trading at 54 times its earnings. But this is a special stock to own, one that investors are willing to pay a big premium for because of its potential.
For one thing, the company generates tons of free cash flow, which means there's plenty of money there to support a dividend plus invest in its long-term growth.
LLY Free Cash Flow (Annual) data by YCharts
Eli Lilly's payout ratio is a manageable 57% and there's room for the company to increase it as well; last year, Eli Lilly boosted its dividend by 15%. But the dividend is just a nice add-on, as what's really exciting are the company's growth prospects.
And a big part of that is related to Mounjaro, a diabetes treatment that has shown to also be effective in helping people lose weight -- some shedding as much as 22.5% of their body weight. Forget a $1 billion blockbuster; this is a drug that could bring in tens of billions in revenue at its peak. Eli Lilly has been investing billions into its operations in recent years to bolster its manufacturing capabilities so that it can help meet the strong demand of its many popular drugs, including Mounjaro and top-seller Trulicity.
There's so much potential growth on the horizon that makes Eli Lilly a fantastic stock to own. If you want to make the most of your tax return, this is a great stock to consider buying as you'll get a solid dividend, which is likely to rise in the future, along with a solid growth business.
2. Apple
Another solid business to invest in is Apple. At $2.6 trillion, the company is already massive, but like Eli Lilly, it gushes cash and perhaps has more than it knows what to do with these days.
AAPL Free Cash Flow (Annual) data by YCharts
The company's vast ecosystem of products and services allows the business to maximize sales to people who use its iPhones, iPads, and computers. The switching costs become more onerous the deeper someone is entrenched in Apple as there is often no shortage of compatibility issues between products and services designed for people who are using Apple versus rival Google, which Alphabet owns, and where Android is the default operating system on handheld devices.
Apple also recently announced that its Apple Card users can now take advantage of a high-yielding savings account through Goldman Sachs that pays an annual percentage yield of 4.15%, which is 10 times higher than the average rate. It's yet another incentive for people to use Apple's products and services. And Apple can do these kinds of things because it generates so much in cash.
The stock's dividend yield of 0.6% is fairly small, but Apple also spends billions on share buybacks, which reduce the share count and help drive up the price of the stock.
AAPL Stock Buyback (Annual) data by YCharts
Apple has a phenomenal business with an ecosystem that is sure to get even bigger and broader, leading to more gains for investors in the long run.
