Before the birth of Rasulullah (sallallahu ‘alaihi wasallam), ‘Abdul Muttalib had seen a dream due to which he kept the newborn child’s name Muhammad. He dreamt that an iron chain appeared from his back. One end of the chain extended towards the sky, the other towards the earth, another towards the west and another towards the east. After some time, the chain transformed into a tree. Every leaf of the tree was glittering with a brightness seventy times more intense than the brilliance of the sun. People from the east as well as the west were clinging onto its branches. Some of the Quraish were also holding onto the branches of this tree, whilst a few others from the Quraish were determined to chop the tree down. Whenever this group decided to approach the tree to cut it down, an extremely handsome young man came and pushed them aside.
In interpretation of his dream, ‘Abdul Muttalib was informed that a boy would be born from his progeny. People from the east to the west would follow him. The beings of the sky as well as the earth would sing his praises. This is why ‘Abdul Muttalib kept his name Muhammad (which means ‘The Praised One’).
(Extracted from Seeratul Mustafa 1/61-62)