The main difference between stocks and bonds is that stocks represent an ownership interest in the issuing entity, while bonds are a form of debt in which the issuer promises to pay the principal amount at a specific date. Another major difference is that stocks pay dividends to the owners only if the issuer declares profit. In the case of bonds, the issuer of a bond is obligated to repay the principal amount at the maturity date and also pay interest to the bondholders at a set interval (annual or semi-annual).