What to do about a two and 1/2 year old who apparently has nightmares?

He wakes up crying and often hysterical. This week he was crying so hard at bedtime, even with me in there, he said “I can’t go to sleep” I asked why and he said “The monsters will get me” It was so pitiful. I assured him the dog would bark and scare them away, and he went to sleep, then told his folks he needs Toby (my dog) to sleep with him. What can we do to help.