The most productive advantage of retaining the remain earnings after tax, preference dividend & equity dividend is maximizing the shareholder's wealth.
The present value of anticipated future returns to the company's owners, or shareholders, is known as shareholder wealth. These returns may come in the form of regular dividend payments or stock sale revenues.
Shareholders are the real owners of the corporation. The profit earned during a accounting year can be distributed in the form of dividend to shareholders, some body corporate may retained the earning with the objective to strengthen the capital structure base by infusing inhouse self earned profit as internal sources of fund to meet out future capital expenditure.
Therefore in order to earn future economic benefits, Retained earnings are made to maximize the shareholder wealth.
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