My personal practice when writing command line utiities for macOS is to use the macOS API to write settings (previously known as “preferences”) into ~/Library/Preferences, so they can interoperate with any GUI versions of them I might like to write, and for the utilities themselves to have command line options to control those settings. As a sibling comment suggests, you do need to avoid name space collisions. You can use a reverse DNS name, or some companies are big enough just to use their company name. They do appear as .plist files but are actually maintained by a daemon – which nicely avoids race problems with multiple processes updating settings.
If I were writing a portable utility which had a dotfile with a documented format the user was expected to edit, I would make it a dotfile under the home directory.
~/Library/Application Support is really more for per-user static data, like presets and templates, things that are known in a GUI by a string in some dialogue but not necessarily thought of by the user as a file.