While the returns on offer with term deposits are the best they have been in years, they still pale in comparison to what's available from ASX 200 dividend shares.

For example, the shares listed below not only offer better yields but also have the potential to generate meaningful capital returns.

And while the share market is of course not risk-free like term deposits are, the risk/reward on offer from these shares could be compelling based on what analysts are saying. Here's what you need to know:

When looking for alternatives to term deposits, it is important to choose ASX 200 dividend shares that are lower risk.

APA Group certainly ticks that box. As an energy infrastructure company and owner of a $27 billion portfolio of gas, electricity, solar and wind assets, it has very defensive and predictable earnings.

It is for this reason that the company is on course to deliver 20 years of distribution growth.

Macquarie is expecting this growth to continue and is forecasting dividends per share of 56 cents in FY 2024 and 57.5 cents in FY 2025. Based on the current APA Group share price of $8.35, this equates to 6.7% and 6.9% dividend yields, respectively.

Macquarie has an outperform rating and a $9.40 price target, which implies a potential upside of ~13% for investors over the next 12 months.

Another ASX 200 dividend share that could be a great alternative to term deposits is Telstra.

It is of course Australia's leading telecommunications and technology company. At the last count, it provided approximately 22.5 million retail mobile services and 3.4 million retail bundle and data services.

As with APA Group, its earnings are considered to be highly defensive and predictable. In fact, it is for this reason that Goldman Sachs is a fan of the company. Its analysts recently commented:

We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn.

Goldman is expecting Telstra to pay fully franked dividends of 18 cents per share in FY 2024 and 19 cents per share in FY 2025. Based on the current Telstra share price of $3.65, this will mean yields of 4.9% and 5.2%, respectively.

Goldman has a buy rating and a $4.55 price target on Telstra's shares. This suggests that they could rise ~25% over the next 12 months.