The best ASX stocks to buy in January 2026 if you want both income and growth

Income and growth are often treated as opposites in investing.

One is seen as defensive and steady, the other as aggressive and uncertain. But some of the most compelling long-term investments are ASX stocks that manage to deliver both.

They generate enough cash to reward shareholders today, while still reinvesting to grow earnings over time.

For investors looking to strike that balance at the start of 2026, here are two ASX stocks that offer a blend of income potential and long-term growth.

Flight Centre Travel Group Ltd (ASX: FLT)

Flight Centre has emerged from the post-pandemic period as a leaner and more focused business.

After navigating one of the most challenging periods in its history, the travel agent giant has rebuilt its earnings base around a streamlined cost structure and a stronger emphasis on its most profitable segments.

From an income perspective, the company is once again in a position to reward shareholders with a growing stream of dividends.

For example, Morgans believes the ASX stock will pay fully franked dividends of 52 cents per share in FY 2026 and then 61 cents per share in FY 2027. Based on its current share price of $15.17, this would mean dividend yields of 3.4% and 4%, respectively.

Morgans also sees plenty of upside for its share price. In response to the “strategically sound acquisition” of cruise agency Iglu, the broker said:

FLT’s strong balance sheet can comfortably fund this acquisition and its capital management strategy. We have upgraded our forecasts to reflect the acquisition of Iglu. Despite recent share price appreciation, FLT’s fundamentals remain attractive and we retain a Buy recommendation with a new A$18.38 price target.

Lovisa Holdings Ltd (ASX: LOV)

Lovisa is a very different kind of opportunity, but one that also manages to offer both income and growth.

The company operates a fast-fashion jewellery retail model that has proven highly scalable across international markets. Its ability to roll out stores quickly, maintain tight inventory control, and refresh product ranges frequently has underpinned strong returns on capital over time.

Looking ahead, the long-term growth story remains tied to store network expansion and execution in overseas markets. With relatively low penetration in many regions, Lovisa still has significant runway to grow its global footprint, while continuing to return capital to shareholders along the way.

Speaking of which, Morgans is expecting dividends of 92 cents per share in FY 2026 and then 114 cents per share in FY 2027. Based on its current share price of $29.57, this would mean dividend yields of 3.1% and 3.85%, respectively.

The broker believes recent share price weakness has created a buying opportunity for investors with this ASX stock. It said:

We see this as a great opportunity to buy this high quality retailer with a global store rollout opportunity trading back around its average 10-year 1-year forward PE multiple (~31x), offering ~20% EPS growth CAGR over the next 3 years. We have lowered our price target to $40 (from $44.50) driven by moving back to 50/50 weighting EV/EBIT and DCF valuation.

The post The best ASX stocks to buy in January 2026 if you want both income and growth appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in Lovisa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Lovisa. The Motley Fool Australia has recommended Flight Centre Travel Group and Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.