What solution should be recommended for adding watermarks to email attachments containing sensitive data in Microsoft 365 E5?

The most suitable solution for adding watermarks to email attachments containing sensitive data in Microsoft 365 E5 is Microsoft Azure Information Protection. This service helps organizations classify, label, and protect data based on its sensitivity. By using Azure Information Protection, organizations can set policies that automatically apply watermarks, headers, or footers to documents and emails, alerting recipients that the content is sensitive.

In contrast, Microsoft Defender for Cloud Apps focuses primarily on securing cloud applications and managing data within them, and while it plays a critical role in data security, it does not offer functionality specifically for adding watermarks to email attachments. Microsoft Threat Protection is designed to provide a unified security solution across various environments, offering capabilities for threat detection and response rather than watermarking documents. Microsoft Data Loss Prevention is also essential for protecting sensitive data and preventing its unauthorized sharing but does not have built-in features specifically for applying visible watermarks to email attachments.

Thus, the correct solution for adding watermarks, which directly addresses the requirement of ensuring sensitive data is visually marked within email communications, is Microsoft Azure Information Protection.