G.G.
I am going through this with my 3 year old. She even shouts out in her sleep while dreaming & I was growing concerned. I mentioned it to our pediatrician and she said it's common at this age and that it's possible she is not getting enough sleep. I don't get the correlation between nightmares and lack of sleep, but I have noticed that putting my daughter to bed earlier does alleviate the problem. I had to move bedtime up 10-15 minutes earlier each night until we got to an 11 hour night sleep. Best of luck!