AT&T (NYSE:T) stock has struggled for some time now. The wireless carrier faces intense price competition at a time where market conditions have forced a costly upgrade in a core business segment. As a result, AT&T stock has experienced a downtrend since 2016.

However, the company now employs a strategy to mitigate lost revenues from a declining television service business. Moreover, its wireless network upgrades should finally bear fruit as companies begin to launch 5G wireless networks this year. With the company restoring and improving its sources of revenue, T stock could finally begin moving higher again.

AT&T Stock Hurt by Shifting Trends

Despite my positive sentiments, I have disliked AT&T stock for a long time. The competition from T-Mobile (NASDAQ:TMUS) and Verizon (NYSE:VZ) had reduced profits to minimal levels. Moreover, the cord-cutting phenomenon undermined pay television offerings as customers switched to streaming services such as Netflix (NASDAQ:NFLX).

Finally, despite minimal profitability, competition in the wireless industry forced the company to build a 5G wireless network costing each major carrier tens of billions of dollars. As a result, AT&T stock trades about 28% below its 2016 highs.

However, everyone has their price, and investors should pay attention to valuation. Assuming the earnings prediction holds, T stock trades at a forward price-to-earnings (PE) ratio of 9.1. This brings its valuation well below the stock’s average PE of 18.6 seen over the last five years.

5G and Streaming Should Help Revive AT&T Stock

Despite the negative sentiment, profits still grew by an average of 6.6% per year over the last five years. This year, analysts predict 15.1% growth. For the next five years, they expect annual growth to average 6.2%. For one, the company should help to make up for much of its lost pay-TV business with the growth of DirecTV Now, its streaming service.

Also, this profit growth should improve as the costly 5G network begins to earn the company revenue. 5G revenues could even beat current estimates. As I stated in a previous article, 5G will probably lead to new products and offerings not yet imagined. Many of these inventions could need AT&T’s 5G service to support them.

Moreover, assuming T-Mobile’s merger with Sprint (NYSE:S) gains approval, only T-Mobile, AT&T and Verizon will offer 5G service. While another company could enter this business in theory, it would have to invest tens of billions of dollars to build a nationwide 5G network.

The price competition in this business has remained intense for some time. Consequently, the odds of a group of investors spending tens of billions of dollars to earn a thin profit margin remains low.

Don’t Forget About the Dividend

Other factors should also benefit AT&T stock investors. Even if T stock stagnates and earns a PE ratio comparable to that of Micron (NASDAQ:MU), investors can still make a nice return. Due to the reduced stock price, T stock now enjoys a $2 per share annual dividend. This takes the dividend yield to an unusually high 6.25%.

T stock also holds the so-called “dividend aristocrat” status since it has hiked its dividend in each of the previous 34 years. With such a long record, the AT&T stock price has become heavily dependent on the company maintaining this streak. So, despite its high dividend, investors will likely see the 35th consecutive annual dividend increase this year.

Bottom Line on T Stock

With a low valuation, a high dividend, and costly investments beginning to bear fruit, price growth may finally come for AT&T stock. The equity suffered for years as competition in its wireless business intensified and consumers turned to lower-cost television services.

However, DirecTV Now has begun to limit lost revenues in television and video services. Moreover, the 5G networks that have merely added costs in previous quarters will soon start to generate revenue. They could also lead to revenue sources not yet imagined as much higher 5G speeds make new services possible.

Finally, AT&T stock itself trades at a low PE ratio. Also, due to expectations surrounding the stock, the company will likely increase the dividend soon despite its generous yield. In short, a perfect storm is forming with T stock, and it appears positioned to rain growth and dividends on new investors.

As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting.