Preheat your oven to 350 degrees F and pour the shredded coconut onto a baking sheet.
Toast the coconut in the oven for 15 minutes, making sure to toss it around every 3-5 minutes so it doesn’t burn, then set aside to cool.
In a large mixing bowl combine milk and coconut pudding mix. Whisk to work out any lumps, then set aside for 5 minutes to let it thicken.
In another mixing bowl, combine heavy cream and powdered sugar. Whip on high until the mixture reaches stiff peaks. Now you have homemade whipped cream!
Add softened cream cheese and the whipped cream to your bowl of thickened coconut pudding. Mix to combine, then fold in 1 cup of the toasted coconut from earlier.
Transfer the dip to a 9-inch pie plate. Spread into an even layer, then sprinkle remaining toasted coconut around the edges!