Honestly I think that the dreaming part doesn't really matter. Like I know some people who dream about their crushes all the time while others don't. Dreams aren't really a reliable way to evaluate a situation.
Anyway, whether or not to ask him out is something that only you can decide. You can do so by stepping back and evaluating your friendship with him. Do you think that it would be worth it, no matter the outcome? Do you think that he may like you back? What are the possible consequences of this for you, him, and all your mutual friends if he says yes? What about if he says no? If he says no, do you have an "escape plan" or are you going to allow yourself to be vulnerable?
If you aren't sure, try spending some time with just the two of you and see how he acts by asking him to hang out. Is he flirty at all? Do you guys seem to really click in a romantic kind of way? If things seem to go well, then you can try asking him out which is basically hanging out but with the goal of getting to know each other more as a romantic prospect rather than just as friends.
Honestly the main thing to think about is if you don't think that you have anything to lose, then I'd say go for it! But if you don't know, then sleep on it. Whatever you do, do it because that is what you want and try not to regret it. Good luck!