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It's been a strong year for shareholders of Garmin ( GRMN). The GPS maker has rallied close to 10% in 2012, over a period when the S&P 500 is struggling to hold onto gains that are half as high.

Garmin has consistently been a high-yield name (it currently pays 40 cents each quarter, a 3.66% yield) and a heavily shorted name -- two factors that could provide big cash payouts and capital gains for shareholders if shorts get squeezed in 2012.

Garmin makes global positioning devices for cars, boats, planes and fitness enthusiasts. That exposure to all corners of the GPS market is significant. It means that Garmin is able to pour R&D into big-ticket electronics (such as the $50,000 G1000 avionics suite for small planes) and then transition the tech to the more margin-sensitive consumer market. It's a strategy that's kept Garmin's offerings more interesting as rivals got squeezed in the highly competitive auto market.

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Short-sellers have been counting on margins at Garmin to flatten out as competition in the for car GPS systems gets more and more intense. To date, that hasn't happened yet. And despite flops such as Garmin's Nuvifone, innovation should keep people buying Garmin products.

Watch for a dividend hike at the firm's June 1 shareholder meeting.

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