yes since you don't make very much per year, you really don't have to worry about taxes much; you can invest either in total index or dividends;
if you are looking for the highest possible return over a really long time period, if I remember reading from the The Intelligent Asset Allocator by William Bernstein (this books talks about this), the highest returns comes from the most volatile high risk investments, i.e. small cap type companies (I think going off memory alone); however, you will do just fine getting the total index fund, that too will give you a really high return if you are investing for a long time period.
For high dividend companies, the stock price is not necessary "losing value" just because it goes down from a dividend distribution; instead it is better to think of it gaining extra price value above and beyond where it should normally be priced a few weeks before the ex-dividend date do the anticipation of getting that dividend; thus once its goes ex-dividend, the drop is taking it back to its original true market value; that extra value reflected in the price going temporarily higher has now been distributed back to the investors by way of the dividend