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Take an actively managed mutual fund that trades stocks including dividend-paying ones. The fund can make money in 2 ways:

  1. Receive dividends from dividend-paying stocks
  2. Sell stocks above cost for a gain

The fund is required to pay out "the money it makes" back to its shareholders. Is, then, the money paid from 1- called "dividends" and the money paid from 2- called "distributions"?

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Both dividends and capital gains are referred to as distributions in that context.

https://www.investopedia.com/terms/d/distribution.asp:

A distribution generally refers to the disbursement of assets from a fund, account, or individual security to an investor. Mutual fund distributions consist of net capital gains made from the profitable sale of portfolio assets, along with dividend income and interest earned by those assets

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