In [58]: words = ['apple', 'bat', 'bar', 'atom', 'book']
In [59]: by_letter={}
In [61]: for word in words:
...: ...: letter = word[0]
...: ...: if letter not in by_letter:
...: ...: by_letter[letter] = [word]
...: ...: else:
...: ...: by_letter[letter].append(word)
In [62]: by_letter
Out[62]: {'a': ['apple', 'apple', 'atom'], 'b': ['bat', 'bat', 'bar', 'book']}