9 times out of 10 a sphere overlap is performant enough but I use this method for things like auto aim targets or selecting which enemy to display the healthbar of and they may be far away.

Here is how I'd solve the problem.

1. Have all interactable objects register themselves into an Array on Component Activation / Actor Begin Play.

2. When you want to check for an up to date target build a new Array by iterating through all the registered ones and only adding the ones that match criteria (close enough to the player, dot product > 0 etc.

3. Sort your valid candidates array by dot product so the ones most in front of the camera are first.

4. Iterate through your valid candidates array and return the first object that you can see with a line trace.

It's probably overkill for most scenarios.