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Retiring wealthy isn't necessarily about hitting the home run investment. Instead, it can be about consistently hitting singles and doubles over time.

U.S. telecom company AT&T (NYSE: T) probably won't raise too many eyebrows. But don't overlook the company's current circumstances, which could position investors for steady wealth creation over the coming years. AT&T is a perfect combination of fundamentals and value, making it likely to perform much better as an investment than Wall Street is used to seeing.

Here is what you need to know.

The core business is performing at a high level

AT&T is the largest wireless carrier in the United States. That means the company has a target on its back in an industry that has relatively few players but remains ruthlessly competitive. Despite being the big dog on campus, AT&T continues collecting new customers. AT&T recently reported first-quarter earnings results and, once again, said it picked up more customers. Net post-paid wireless customers grew by 1.6 million year over year, while fiber optics customers grew by 1.3 million. Those gains translated to a 3.3% year-over-year bump for wireless revenue and 19.5% growth in fiber.

The company has performed well for several straight quarters, a sign that AT&T is far more competent at its core business than trying to branch out into new avenues. Over the past decade, the stock's lousy performance is primarily the result of poor execution and capital management, which first saw AT&T overborrow to fund massive media acquisitions and then fail to execute, ultimately abandoning the media industry altogether.

The balance sheet still isn't perfect, but long-term debt has gradually come down in recent years, and AT&T's financials are continually improving. As debt falls, that interest expense will shift to the bottom line as earnings. Keep in mind that interest expenses are declining despite far higher interest rates in recent years, which makes refinancing debt more expensive.

Again, there is more work ahead, but this is the financial progress long-term investors should be looking for.

Abundant cash flow for a generous dividend yield

AT&T's massive dividend is probably the lone silver lining for investors who have held the stock at any point in the past 15 years. Despite management cutting the dividend to free up cash flow, the stock still yields nearly 6.5% at its current share price. A high yield can signal market skepticism that a company can afford its payout, but AT&T is rock solid here.

Management is guiding for free cash flow between $17 billion and $18 billion, while AT&T's dividend costs the company roughly $8 billion annually. Do the math, and that's a dividend payout ratio under 50% of incoming cash flows.

In other words, AT&T's dividend looks safe, especially since it leaves enough room for management to pay down about $10 billion of its debt load annually.

An attractive valuation that should translate to investment returns

Investors have begun looking past AT&T, judging by its valuation. Today, shares trade at just 7 times this year's estimated earnings. Analysts aren't enthusiastic about earnings growth, projecting low-single-digit increases for the next several years. But I'm a little more optimistic.

The strength in the wireless and fiber business, combined with interest expense dollars shifting to the bottom line, could help move the needle. Additionally, AT&T could start repurchasing shares once the balance sheet gets healthy enough. Unlike in the past, AT&T is not choking itself by spending all its cash flow on a dividend, so there are more potential options for that extra $10 billion in the future.

Management is guiding for a return to earnings growth in 2025. Could AT&T get to mid-single-digit earnings growth over the long term? Doing so would potentially create double-digit investment returns (remember, the stock is yielding 6.5%), and that's before factoring in a healthier AT&T commanding a higher stock valuation.

Add it all up, and there's a good chance AT&T generates enough steady returns to help a long-term investor build wealth. The ability to retire a millionaire with AT&T's help will largely depend on factors like your initial investment, regular contributions, and the overall time horizon. The power of compounding interest over many years is crucial to maximizing potential returns. With that in mind, AT&T looks like a helpful companion on that journey.

Should you invest $1,000 in AT&T right now?

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.