A dividend is a distribution from a company to a shareholder that usually represents earnings being distributed. A capital gain is the change in the value of the investment you own.
Let's say you purchase a share of stock for $100 today. The company pays a dividend of $5. This is income to you which you will pay tax on (unless it is in a tax deferred/free account). A year later the value of the stock in the markets is $115. This $15 gain would represent an unrealized gain. If you were to sell the stock you would "realize" the gain and then it becomes a capital gain for which you would pay tax (again unless in a tax-deferred account). If in a taxable account and owned for more than one year it is a long-term capital gain for which the tax is at a preferential lower rate than ordinary income. If owned less than one year then it is a short-term capital gain and taxable at your ordinary income tax rate.
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