In a medium saucepan, bring water or broth to a boil over high heat.

Whisk in the grits, reduce heat to low, and simmer for 20 to 25 minutes, stirring occasionally until thick and creamy.

Remove the pot from heat. Stir in butter, cheddar cheese, and heavy cream or milk until melted and fully mixed. Season with salt and black pepper. Cover and keep warm.

In a large skillet over medium heat, melt butter with olive oil.

Add diced onion and bell pepper; sauté for 5 minutes until softened.

Stir in minced garlic and cook for 30 seconds until fragrant.

Sprinkle flour over the sautéed vegetables and cook, stirring constantly, for 1 minute to make a light roux.

Slowly pour in stock while stirring to prevent lumps. Mix in diced tomatoes with juices, Cajun seasoning, smoked paprika, dried thyme, and hot sauce if using. Simmer for 5 to 7 minutes until it thickens.

Add shrimp to the skillet and cook for 3 to 4 minutes until they are pink and opaque.

Spoon the creamy grits into individual serving bowls. Ladle Cajun shrimp and gravy over the grits. Garnish with sliced green onions and more hot sauce if desired.