A stock with a high corporate profile may provide investors with a feeling of security, but it doesn’t pay them any dividends. Instead, owning a lot of in-the-limelight stocks can work against safe investing.

Lots of smart people work in the public relations and the brokerage business. They do a highly effective job of publicizing and promoting their clients’ stocks. Many stocks in the broker/public relations limelight go up more-or-less steadily for years at a time. But when they come down, they can fall much further than you ever thought possible. That’s why it’s a mistake to stuff your portfolio full of them.

On the other hand, at any given time, lots of prosperous, well-established companies are out of investor fashion. Some of the biggest profits you ever make will come from buying these stocks before they find their way into the limelight.

Instead of focusing on familiarity, invest in the kinds of stocks we recommend in our Successful Investor newsletter. Here are four of our safe investing guidelines we use in choosing those stocks:

1. Maintain an attitude of healthy skepticism when reviewing advice you get from brokers or any other source.

Many investors assume their broker is honest and has their best interests at heart; if not, they get a new broker. But for safe investing, you should also check for conflicts of interest that might warp the broker’s judgment.

For instance, selling new issues or new structured products is substantially more profitable for the broker and the brokerage firm than carrying out transactions in existing securities. But existing issues may be better for you.

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Sometimes, brokerage firms accommodate institutional clients by buying blocks of stock from them when it might otherwise take days or weeks for the institution to sell the stock on the market at a favourable price. The brokerage firm then takes the stock into inventory and offers its brokers an extra fee or some other inducement to sell it to their own “retail” clients.

Respectable brokers would only do this with respectable stocks, of course. But the opportunity to earn an extra fee (and curry favour with the boss) can lead some brokers to make recommendations that are more for the broker’s benefit than the client’s.

2. Spread your money out across most, if not all, of the five main economic sectors (Resources & Commodities, Finance, Manufacturing & Industry, Utilities and Consumer).

That way, you automatically diversify, and diversification is a key component of safe investing. You also cut your risk of loading up on a company or industry that’s about to slump.

3. Give your investments time to pay off.

Resist the ever-present urge to buy and sell. A sound portfolio, built through careful and safe investing, needs surprisingly few changes over the years, so you have fewer occasions to make costly mistakes.

4. Focus on stocks that offer hidden value.

As part of your safe investing strategy, you should invest modestly, if at all, in stocks that are often in the news, or that seem to have a large and enthusiastic broker following. Your interests differ from those of the public-relations firms and the brokers.

For safe investing, focus on investing in high-quality stocks that offer hidden value. As you know, we put a lot of stress on what we call “hidden assets” — assets that are easy to overlook, since their full value rarely appears on a company’s financial statements.

These assets include long-time real estate holdings that are worth much more than their balance-sheet value (usually original cost minus depreciation). Under-used brand names are another good example. When they are developed in-house, they won’t show any balance-sheet value. Another key hidden asset — one of our favourites — is research spending. Companies write off their research outlays in the year in which they spend the money, but benefits such as new or better products may only materialize years in the future.

Every month, you can get portfolio-building advice like this, as well as our latest stock recommendations, in The Successful Investor. Click here to learn more.