Adding external contacts to a Distribution group. Do the need to be in Contacts?

I have a list which contains 15 external contacts I need to add all of them to a distribution group in 365 and also for certain users to be able to email.

I did research It appears I have to first create them as contacts in our Office 365 tenant before they can be added to the group or list, is that correct?

This makes them appear in GAL but we don’t want this, it would be nice if they did NOT show up in the GAL, just in the group, not sure if that is possible.

Can anyone clarify it, please??

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