Toast the Coconut:

Preheat oven to 350°F (175°C). Spread the shredded coconut in a thin layer on a baking sheet. Toast for 5–8 minutes, stirring once or twice, until lightly golden and fragrant. Let cool.

Start the Base:

In a medium saucepan, whisk together cornstarch, sugar, and salt. Slowly pour in the milk while whisking to prevent lumps.

Heat the Mixture:

Place the saucepan over medium heat. Cook, whisking constantly, until the mixture begins to thicken and bubble—about 6–8 minutes.

Temper the Yolks:

In a small bowl, beat the egg yolks. Slowly add a few tablespoons of the hot milk mixture to the yolks, whisking constantly (this prevents scrambling). Then, gradually stir the yolk mixture back into the saucepan.

Cook the Pudding:

Continue to cook the pudding for another 2–3 minutes, stirring constantly, until it thickens to a pudding-like consistency. Remove from heat.

Add Flavor:

Stir in the butter, vanilla, and coconut extract (if using). Fold in about 3/4 cup of the toasted coconut, reserving the rest for topping.

Cool and Chill:

Pour the pudding into individual bowls, ramekins, or a single serving dish. Cover with plastic wrap, pressing it directly onto the surface to prevent a skin from forming. Chill in the fridge for at least 2 hours.

Serve:

Top each serving with the reserved toasted coconut before serving. Add whipped cream or a cherry if you want to dress it up.