Looking through Merck's (NYSE:MRK) second-quarter earnings release, I was reminded of the ducks that have colonized a nearby lake. Viewing them from afar, these tranquil little figures inching along the surface, it's easy to mistake them for decoys. They seem so still -- just bobbing up and down with the waves. But when you get close enough to catch a glimpse of what's going on under the murky waters, you can see those little webbed feet paddling away, a mile a minute.

Like my neighbors, the ducks, Motley Fool Income Investor recommendation Merck may not appear to be going forward right now, but there could be a lot more going on below the surface than there appears to be at first glance.

Second-quarter results were nothing to quack about. Sales were down 9%, and adjusted net income fell about 23% from the year-ago level.

Singulair was the only drug of substantial clout to post double-digit growth (14%). Fosamax and Cozaar/Hyzaar both grew in the high single digits. And while Zocor sales continue to slide (down 16%), the drug still contributed more than a billion dollars in revenue for the quarter.

On a more positive note, sales in the Vytorin/Zetia partnership with Schering-Plough (NYSE:SGP) continue to grow nicely -- more than doubling in the second quarter.

As is generally the case, the company's pipeline continues to be an exercise in "hurry up and wait." A filing for approval of potential diabetes med Pargluva (muraglitizar) is under review at the FDA, and I would think that Merck and marketing partner Bristol-Myers Squibb (NYSE:BMY) should hear back with a verdict before the end of the year.

While this drug could be a bit controversial (similar developmental compounds have suggested a cancer risk), it could also be a legitimate blockbuster. It should, however, be noted that studies done to date on muraglitizar suggest that this drug is indeed safe.

In addition to Pargluva, the company continues to push ahead to get approval and launch four new vaccines and also hopes to file for approval of sitagliptin (a DPP-IV inhibitor) in 2006.

Vioxx litigation will continue to hang over this stock for some time, and investors need to expect to hear the occasional bad news on this front. That doesn't mean that management is just sitting on its hands -- in addition to keeping the pipeline humming, it appears that further cost reduction efforts will come, as well.

Weighing the pros and cons, I think that Merck's stock is trading pretty much where it should be. What does make the story a bit more interesting is that robust dividend, which is currently yielding almost 4.8%. There doesn't appear to be any imminent risk to that dividend, so investors buying today can get a nice supplemental payday while they wait for the company's issues to be sorted out.

Merck's dividend yield attracted Mathew Emmert, and he recommended it for Motley Fool Income Investor subscribers. You can find out which other companies Mathew has highlighted by signing up for a free trial of the newsletter today.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).