First, use this post to add the External Contacts. Adding Exteral Contacts to Exchange Online
If you need to create the Distribution List, use this post Creating a Distribution Group in Office 365 – Exchange Online
Follow the steps below to add the external contact to a Distribution Group.
Login to the Office 365 Admin Center
Click the App Launcher (top left corner)
Open Exchange Admin Center
Select the Distribution Group
Click the Edit Pencil (A new window will open)
Click (A new window will open)
Double click the contact or select the external contact and click add ->
The contact will now be in the list of members
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Office 365 MVP