Yes. If you are able to hold your baby, you can do skin-to-skin. Tiny babies on breathing machines, IVs, and heart monitors can often be held skin-to-skin. In fact, they often do better in this position: their heart rate, breathing and temperature are more stable.
Most dreaming occurs during the fourth stage of sleep, known as rapid eye movement (REM) sleep. REM sleep is characterized by eye movement, increased respiration rate and increased brain activity. The American Sleep Foundation suggests that people spend approximately 20 percent of their total sleep in this stage.
According to the activation-synthesis theory, dreams are merely the brain's reaction to random biological processes that occur during sleep. Various parts of the brain-in particular the pons, part of the brain stem-continue to function and produce stimuli during sleep and REM sleep in particular.