The sentence is fine. I personally would say "his misplaced trust in his friends cost him dearly." That is more natural to me although others may say different.
A best / close / dear / good / trusted friend A lifelong / longtime / old friend A family / mutual / school friend
You can also use some of these words to describe a friend(s): closest friend, new friend, old friend, close friend, radical friend, personal friend, great friend, funny friend, decent friend, best friend, true friend, strange friend, wonderful friend.