What is a coupon and a dividend?

A coupon is a periodic interest payment made to bondholders, representing the bond's yield, typically expressed as a percentage of the bond's face value. In contrast, a dividend is a portion of a company's profits distributed to its shareholders, usually paid in cash or additional shares. Both serve as forms of income for investors, but coupons are specific to fixed-income securities like bonds, while dividends are associated with equity investments in stocks.