Royal Bank of Canada (USA) (NYSE:RY)

Royal Bank of Canada is posting record earnings in two of its segments, strengthened the balance sheet, and improved asset quality with lower provision for credit losses during the most recent quarter. Out of 5 operating segments, only income from capital markets was down in 2011.

Although it lost its triple A credit rating in 2010, steps have been taken to reduce risk and as far as exposure to Europe is involved, less than 10% of total exposures are to Europe and even those areas are mainly the UK, Germany, France.

RY’s acquisition of Fortis Wealth Management is giving them the exposure to Asia that they need to diversify in emerging markets. Whilst on the one hand they ‘only’ receive 17% of revenue internationally, they are expanding on that carefully.

RY increased its dividend to $0.54 in mid-2011 and has maintained its dividend throughout the financial crisis. Dividend yield is at 4.28%, so I see limited downside as the YTD dividend high was around 4.9 and 2012 full year EPS estimate is $4.52.

Among main street and the Fool, the big five Canadian banks all get 4-star CAPS ratings expect Canadian Imperial Bank of Commerce which received a 3-star. Most Fools have realised that’s because they stick to conservative business models, have limited foreign exposure and well managed balance sheets. RY may not be as exciting as some big-name US banks but it is worth looking into if you want some bank exposure and a yield that will beat most places you can think of.