Wireless communications giant AT&T Inc. (NYSE:T) didn’t provide investors with the returns they expected in the first half of 2017, but T stock offers a solid buying opportunity for investors who are looking for a bounce-back candidate in the second half of the year.

AT&T stock is down 13.4% year to date compared to an 8.4% rise in the S&P 500 Index. The shares closed Monday at $36.83 and are now more than 16% below their 52-week high of $43.98 reached last August. But I expect the stock to regain to that level by the end of the year.

Adding to the appeal of T stock is a dividend yield of 5.21% — more than twice the 2.00% average yield of the S&P 500.

Reasons to Bet on AT&T

To be sure, the Dallas, Texas-based bellwether is struggling to attract customers as it faces tougher competition from the likes of T-Mobile US Inc (NASDAQ:TMUS) and Sprint Corp (NYSE:S). But the proposed $85 billion acquisition of Time Warner Inc.(NYSE:TWX) would give AT&T the revenue diversification it desperately craves.

Combining its distribution network with Time Warner’s premium television content gives AT&T a powerful portfolio to complement its wireline, wireless, and pay-TV business.

AT&T wants to use Time Warner’s programming, which includes a slew of content including shows from CNN, HBO and Comedy Central, for its over-the-top streaming service DirecTV Now, which was billed as the company’s answer to the cord-cutting phenomenon.

But for DirecTV Now to emerge as a viable alternative to traditional cable — now under siege by Alphabet Inc’s (NASDAQ:GOOG, NASDAQ:GOOGL) YouTube, Netflix, Inc. (NASDAQ:NFLX) and Amazon.com, Inc. (NASDAQ:AMZN) — the service must offer content consumers can’t get anywhere else.

Along with must-see content like HBO’s Game of Thrones, Time Warner also adds operations that are less regulated than AT&T’s traditional businesses. As well, thanks to its increasing focus on targeted advertising, TWX will help T better compete with Google and Facebook Inc (NASDAQ:FB), which make boatloads of money using data to deliver to advertisers the demographics they desire.

AT&T and Time Warner both understand that the advertising industry is going through a massive upheaval as Americans spend more time on portable digital devices and less in front of our television sets.

This scenario, which has enabled Google and Facebook to control some 90% of digital advertising, is mostly due to the growth of the internet and smartphones around the world. But T and TWX executives, who are eight months into regulatory review of the deal, believe they can breach the GOOGL-FB duopoly and secure a sizable share of those advertising dollars.

Keeping Its Eyes on the Prize

Meanwhile, AT&T continues to build its 5G next-generation network, with sights on a launch in the next four years.

It plans to partner this year with Qualcomm, Inc. (NASDAQ:QCOM) and Telefonaktiebolaget LM Ericsson (NASDAQ:ERIC) on residential tests of mobile and fixed 5G services, in part to determine how well DirecTV Now will work on the next-generation connections.

Bottom Line for T Stock

While a fiercely competitive wireless market, driven by the likes of market leader Verizon Communications Inc. (NYSE:VZ), has pressured AT&T’s growth prospects, the company is making moves to improve its position. And from a risk-reward perspective, good luck finding another company with the combination of income and growth potential that is trading at such a massive discount to the rest of the market.

AT&T shares are priced at a forward P/E ratio of 13 — six points below the S&P 500 — making it one of the best bargains on the market.

T stock should be owned by investors who are looking for a safe dividend-payer that can outperform the market in the next 12 to 18 months.

As of this writing, Richard Saintvilus did not hold a position in any of the aforementioned securities.