Word has two ways of doing it (sort of). If you don't find what you want under "watermark" you might try looking at "Format|Theme."
From past experience (mainly with PostScript tricks), anything you put in a header in Word will print before the rest of the page, so text on the main page will overprint what's in the header, if you set margins appropriately. The main "trick" is to use a "-" (minus) in front of the top margin setting, which doesn't make it start off the page, but makes it an "absolute" rather than "relative to text" measure so that the overprinting will happen instead of just pushing the text to the next page when your header is full page size. (Note: this isn't a "recommended practice" in recent Word versions. I figure they just forgot to mention it.)
My Photoshop Elements main reference, Photoshop Elements for Digital Photographers, Scott Kelby, New Riders - highly recommended, only mentions "lineart" sorts of watermarking of prints. Key there is to apply "Effects|Clear Emboss" from the effects pallette to the watermark layer to give a "raised text effect and make the layer transparent." The big Photoshop versions should have something similar.