Here's Why I Think AT&T Stock Could Be a No-Brainer Buy Right Now

AT&T (NYSE:T) has been an underwhelming stock to own over the past year. In 12 months, it has declined by 12%, while the S&P 500, which is a collection of leading stocks on U.S. markets, has risen by over 16%. It's been a disappointing performance from a leading telecom company, as investors may have been spooked by the risk posed by Space Exploration Technologies Corp, also known as SpaceX.

The good news, however, is that the recent bearishness in AT&T stock may have created a great opportunity for investors to buy it now at a more attractive valuation. The risk from SpaceX looks to be overblown, and here's a closer look at why AT&T stock might be a no-brainer buy today.

Image source: Getty Images.

AT&T partners with Amazon on satellite internet

Last week, AT&T announced a deal with Amazon (NASDAQ:AMZN) to become the first telecom company in the U.S. to offer broadband satellite services via Amazon Leo, which uses the tech giant's low Earth orbit satellite network.

AT&T, which already offers fiber and 5G, says that with satellite services, it is now "uniquely positioned to provide that reliability by bringing together three critical network layers."

While many investors may have feared that SpaceX's Starlink internet service might chip away at AT&T's market share in the future, the telecom giant has shown that this is an area that it's pursuing and isn't going to be passive on.

The stock provides investors with tremendous value

Amid the SpaceX-related fears, AT&T's stock has performed poorly this year. But in recent months, the stock has been picking up steam again, as investors appear to be recognizing the great buying opportunity at hand with AT&T stock. And even with it rallying since July, the stock remains a fairly attractive option today.

Currently, the stock looks cheap as it trades at less than nine times its trailing earnings. And perhaps the biggest reason to invest in AT&T is for its dividend, which yields 4.3% -- far higher than the S&P 500 average of around 1.1%.

Between a high yield and a modest valuation, there's some significant incentive to buy and hold shares of AT&T. The company is a leader in telecom, and the market may have overreacted to the risk that SpaceX poses, as AT&T has shown, through its deal with Amazon, that it isn't simply going to be standing pat and allow a rival, regardless of how popular it may be, to chip away at its business.

AT&T's stock looks underrated right now, as it may not be just a great source of recurring income for investors, but it may also produce some terrific gains down the road.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.