Q400 flight crew experiences partial opening of baggage door at cruise. Declare emergency and divert to nearest suitable airport.

Narrative

Upon reaching 16;000 FT MSL and completion of the Cruise checklist; crossing the Delaware Bay; we received a Master Warning 'Fuselage Doors.' As Pilot Monitoring I immediately brought up the Doors page on the MFD which indicated a non secure Aft Cargo Door. Pressurization held as normal. 'Fuselage Doors' Quick Reference Handbook was called for and completed moments later. Required action called for in the Quick Reference Handbook stated '&land at nearest suitable airport&.' ATC was advised of our situation and a diversion close by was most likely expected. A descent to 10;000 FT MSL was requested and initiated. Dispatch was contacted first by ACARS then followed with a phone patch via COMRDO. Discretion was left to myself; the Pilot in Command; as to the place of diversion. I elected to proceed to ZZZ which was close; station familiarity and contracted maintenance. Passengers and Flight Attendants were briefed and the flight landed 15 minutes later without incident. Upon inspection of the aft cargo door at the gate; the handle had popped out but the door had not opened inflight. A logbook entry was made; cleared by Line Maintenance; and 35 minutes later the flight departed.